Energy Research Corporation to Split Off Its Battery Group
11 August 1998
Energy Research Corporation to Create Separate Company of Its Battery Group
DANBURY, Conn.--Aug. 10, 1998--The Board of Directors of Energy Research Corporation (AMEX: ERC) has voted to form a separate company consisting of ERC's Battery Group, and is contemplating spinning it off to shareholders."ERC has a long history in developing various kinds of advanced batteries, mostly for demanding military applications," said Jerry Leitman, CEO of ERC. "Now that we have, with our nickel-zinc battery, a proprietary technology with potential applications in a broad number of consumer products, the time has come to change our organizational structure to best take advantage of the opportunities before us."
"The business model for commercializing our two products, batteries and fuel cells, are really quite different," continued Mr. Leitman. "For our batteries we hope to have numerous companies taking licenses for a variety of applications and geographic areas, resulting in numerous production facilities worldwide, only a few of which would be owned or operated, wholly or in part, by ERC's Battery Group. Finding the right license partners and helping them exploit their markets will be the keys to success with our battery technology."
"Success for our proprietary Direct Fuel Cell technology, on the other hand, will strongly depend on our ability to manufacture the fuel cell stacks cost effectively to very tight tolerances. The more we can lower our production costs and the price per kilowatt for our fuel cell units, the bigger the share of the multi-billion dollar annual market for stationary power we can garner."
"Creating two separate companies will enable the management of each to focus on the core strengths needed to make each business successful."
In 1998 ERC has licensed a joint Chinese/Taiwanese venture to use its nickel-zinc batteries for electric vehicles and hybrid electric vehicles in parts of Asia, licensed a Chinese company to use the technology for electric bicycles, scooters, recreational vehicles and other applications, and formed a joint venture to manufacture the batteries in China. In addition, ERC is in discussions with other companies in the U.S., Europe, and Asia for other possible applications and markets. Because of its material components, nickel and zinc, are both relatively low cost, and the battery's capacity and power output are both high, ERC is optimistic about this technology's commercial potential.
In addition, ERC has previously reported it expected a one time addition to earnings in the July 1998 quarter of $0.24 in connection with a fee paid under its license agreement with Xiamen Three Circles Company, Ltd. Upon further review of this transaction, ERC has decided not to recognize any income related to this license payment.
Energy Research Corporation, located in Danbury and Torrington, Connecticut, is an internationally recognized leader in the field of electrochemical technology for electric power generation and storage. ERC is developing its Direct Fuel Cells and batteries through funding from and in cooperation with government, electric utility and major international industrial organizations.
This press release contains forward-looking statements regarding the completion of the formation of an ERC battery group subsidiary, the spinoff of the ERC battery group subsidiary, and the development, potential markets and commercialization of ERC's nickel-zinc rechargeable batteries. The successful implementation of the spinoff and the development and commercialization of the nickel-zinc rechargeable batteries, including the licensing of ERC's battery technology, involve significant risks and uncertainties. There can be no assurance that the licensing or development of ERC's nickel-zinc rechargeable batteries, or the operation and development of production facilities by ERC or its licensees, will be successful. The forward-looking statements in this press release speak only as of this date. ERC expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in ERC's expectation with regard thereto or any change in events, conditions or circumstances on which any such statement is based.