Raser Technologies Letter to Shareholders December 1, 2004
PROVO, Utah--Dec. 1, 2004--Raser Technologies (OTCBB: RSTG)Dear Shareholder,
I'd like to offer a warm holiday greeting to all of the shareholders, employees and friends of Raser Technologies. Along with you, we look forward to a bright future based on the continued implementation of our business plan. We believe that Raser's advanced electric motor and controller technology will play an important role in our futures, in many ways.
We have come a long way in just 12 short months since we first introduced early performance test results at the Electric Vehicle Symposium, in late November of 2003, and became a public company. Since then we have been responding to leading manufacturers and OEMs who have asked to evaluate the technology through our test demonstration program and adding several related inventions to our portfolio. This letter gives me an opportunity to share exciting news and information on our company's progress within our target markets.
In this letter, I will briefly describe Symetron(R) technology's general applications, share an overview of our licensing and marketing strategy, and report on the strategic market analysis we have completed with the Monitor Group. Readers are invited to review our most recent 10-QSB filed with the SEC and available through our website. A significant highlight of this financial report was the successful financing completed in the third quarter of 2004 which we believe will be sufficient to execute our business plan.
Raser Technologies was organized to commercialize its novel electric motor and controller technology, which we believe to be an industry breakthrough. During the last 12 months our company has been developing and enhancing several iterations of Symetron(R) technology. Current development programs include axial motors, pancake motors, alternators, integrated starter alternators (ISAs), and generators.
Marketing & Commercialization
During the last 12 months, we have been pleased with broad and diverse initial market interest in Symetron(R) technology. To help identify and prioritize industries and markets, along with key leaders within those industries and markets, the Company engaged The Monitor Group. The Monitor Group is an internationally renowned strategy development and marketing consulting firm headquartered in Cambridge, Massachusetts. Consistent with our strategy, during the last year, our management, marketing and technical teams have met with congressional and senate officials, the U.S. military, major electric motor manufacturers, automotive manufacturers, alternator technology companies and others, both domestically and internationally, to discuss the advancement of Symetron(R) technology and incorporation of the technology into specific applications. These discussions have resulted in the initiation of several test demonstration projects with specific end goals in mind. This process is an integral step on the path leading towards the establishment of technology licensing agreements.
Symetron(R) Technology -- Motor Programs and Their Applications
Axial Motor: The axial motor is an AC Induction motor packaged in an axial shape (a cylinder with length greater than diameter). We have developed and tested unique technology for both the motor and its controller. Acting in concert with our controller, the Symetron(R) enhanced motor can deliver both greater continuous and intermittent or peak torque, at excellent efficiencies. The target applications for these motor systems are traction drive systems with high intermittent and variable torque requirements. Target markets include hybrid-electric bus and truck motors, delivery trucks, industrial traction, elevators, and compressor motors for heating, ventilation, and air conditioning applications.
Pancake Motor: The pancake motor is an AC induction motor packaged in a pancake shape (a cylinder with diameter greater than length). In this series of motors, the unique technology of the axial motor type acts in concert with pancake design features to produce a unique very high torque motor with a versatile shape that can be applied to many hybrid vehicle applications. We believe that our pancake shaped AC induction motor can deliver comparable performance to that of the best state-of-the-art permanent magnet motor, yet has the economy, durability and scalability of an AC motor design, which we believe to be an advantage for mass production and broad application. The target applications for the AC pancake design include traction drives such as integrated transaxle assemblies, hub, and direct drive fuel cell vehicles. Target markets include hybrid electric automobiles, trucks, industrial traction, and some industrial applications.
Alternators: Raser is testing the application of its technology to alternators for automobiles, trucks, buses and other vehicles through a test demonstration program with a leading manufacturer of truck alternators. Our engineers have developed a unique design, which we expect to deliver more power out of an alternator by operating more efficiently than current state-of-the-art products. The target market for this technology is the transportation market.
Integrated Starter Alternators: Raser is investigating the possible application of its technology to integrated starter alternators. The Integrated Starter Alternator (ISA) is the combination of two devices, the starter motor and the alternator designed for hybrid integration in a truck or automobile. Raser plans to apply its pancake AC induction motor technology together with its advanced alternator design to create an ISA. This combination can deliver a unique AC device designed to be integrated with an internal combustion engine and drive train for mild to medium hybrid vehicle applications. Mild hybrids such as the GM Sierra truck reduce fuel consumption by turning off the engine during idle and stops, and provide a source of AC onboard mobile power generation, ideal for electric tools used by contractors. Medium hybrids use a more powerful ISA to add launch assist for low speed assisted acceleration, further reducing fuel consumption. Target markets include hybrid electric automobiles, trucks, buses, and military vehicles.
Generators: Raser has been investigating the application of our technology to the power generation markets. This work is in the early development stage, but shows promise. Significant development remains to be done before we can fully assess its market potential.
Raser's Management Team
During the course of this last year, we have brought together a world class management team to help bring our technologies to the market. With John Ritter serving as President, Timothy Fehr serving as our Chief Technology Officer and William Dwyer serving as our Chief Financial Officer, we are led by over 80 years of Senior Executive experience. This team continues to manage the business, and to assemble a group of industry professionals with specific expertise in the commercialization of license based technologies. In this effort, the Company has retained the law firm of Wilson Sonsini Goodrich & Rosati to advise us on our SEC reporting and financing activities. The Company has also retained the law firm of Burns Doane Swecker & Mathis to handle our continued patent and licensing work. Both firms have world-renowned expertise in their respective areas, which substantially supports our technology and licensing endeavors. Our initial patents were filed approximately two years ago. Since that point we have filed numerous additional patents, which detail new applications within the Symetron(R) group of technologies.
Test Demonstration Programs
Raser has developed the Test Demonstration Program to facilitate a potential customer's evaluation of the Symetron technology, as well as its value creation potential. Test demonstration programs can take 9-12 months to complete. The Test Demonstration Program is structured such that a customer first identifies a product for enhancement with Symetron(R) technology and performance improvement targets that the customer would like to achieve. We then design a motor, track performance modeling and review performance projections with the customer. The next step is to develop and build a custom prototype for testing and evaluation on a dynamometer to verify performance modeling. The test demonstration process establishes important and necessary steps that should lead directly to licensing, and also helps to identify an appropriate license value through quantifiable performance improvements.
Recently we were asked, "If the technology is an industry breakthrough, why aren't you taking steps towards immediate licenses?" Raser's test demonstration program is the process by which potential license candidates evaluate, adapt and, under license, apply our technology. We are advancing through these steps as quickly as practicable. Keep in mind that we are not selling motors to motor distributors, rather we are adapting advanced technology to manufacturers' current and new motor designs. This process is necessarily methodical, and yields measurable results upon which we can justify appropriate license fees based on quantifiable improvements. To date, our test demonstration programs have generated interest from a diverse range of markets, applications and customers. We are encouraged with the response to the technology and are actively adding new potential licensing opportunities.
Sincerely,
Kraig T. Higginson
About Raser Technologies
Founded in 2001, Raser Technologies believes that its pending patents cover breakthrough technologies. These technologies more effectively harness one of nature's most useful forms of energy and deliver it in a low-cost, lightweight electric drive system for industry, home, and electric vehicles. For more information, visit www.rasertech.com.
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