Altair Nanotechnologies' CEO Discusses Q2 2012 Results - Earnings Call Transcript

| About: Altair Nanotechnologies (ALTI)
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Altair Nanotechnologies Inc. (NASDAQ:ALTI) Q2 2012 Earnings Call August 9, 2012 11:00 AM ET


Tom Laughran – IR

Alexander Lee – CEO

Steven Wong – CFO


Frank Zhou – Private Investor

Richard Voight – Private Investor

Patrick Utter – Private Investor

Robert Lenton – Private Investor

Ken Yang – Private Investor


Thank you for your patience. You have joined the Altair Nanotechnologies Incorporated Q2 2012 financial results call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session where you will be asked to press star one on your touch-tone telephone to queue up for a question. (Operator Instructions)

At this time, I would like to turn the call over to your host, Tom Laughran. Sir, you may begin.

Tom Laughran

Thank you.

I’ve been asked to make the following statement. The statements in this conference call that relate to future results, markets, growth plans and performance are forward-looking and involve certain risk and uncertainties including those associated with uncertain demand for our products and services.

The early stage of development of many of our products and services and related markets and other risks identified in the company’s SEC filings including its most recent annual report in Form 10-K in quarterly reports on Form 10-Q. Actual results, events and performance may differ materially.

Conference call participants are cautioned not to place under reliance on these forward-looking statements, which speak only as of the date of this conference call. Altairnano undertakes no obligation to update these forward-looking statements to reflect events or circumstances after today’s date or to reflect the occurrence of unanticipated events.

Joining me on today’s call is the company’s chief executive officer, Mr. Alexander Lee, and the company’s chief financial officer, Mr. Steven Wong.

I’d now like to turn the call over to the chief executive officer, Mr. Alexander Lee. Alex?

Alexander Lee

Thank you. Good morning everyone and welcome to the call.

I would like to take this opportunity to give you a quick update on our various initiatives. As many of you know, Albert and I have both joined the company at the beginning of the second quarter. Albert serves as the president of the company and I’m now serving as the CEO.

Upon taking our respective positions, we quickly turned our focus to three key areas which I’d like to discuss today; namely our activities in China, our focus on revenue generation and some of our product activities.

With respect to China, Albert and I quickly understood the importance of the China market to our business plan. So we focus on the company’s negotiations with the cities of Wu’an and Handan, which are both located in Hebei province in China.

By April 19th, we successfully concluded our negotiations and signed our agreements in an economic development confine in Hong Kong, which is hosted by Handan City. These agreements shall provide many perspective benefits of the company including the planned establishment and production facility within the newly formed technology firm in Wu’an City.

In addition, these agreements include various orders for EV buses, taxis, and energy storage systems over the next few years. Since we signed those agreements, we’ve made some excellent progress. We’ve established an office in July at China and started to hire some initial staff there.

We retained video in China to manager accounts. We started the planning process and submitted our preliminary plan designs and send everyone for their review. The land transfers will occur in phases and the process is moving along according to the plan.

August 1st, we received $1.9 million down payment from the City of Wu’an for its first EV bus order. This order calls for the delivery of 50 medium-sized EV buses by the end of 2012.

In the next few weeks, we’ll create ground in the first phase of construction at the plant Altair site and Wu’an Technology Park. And essentially we’ll be building a showroom in sales office as part of the first phase of construction.

In terms of revenue, the management team has placed great emphasis on the issue of revenue generation both through the delivery of existing orders and through new sales. We have four large energy storage systems in our product pipeline, project pipeline, I’m sorry, along with smaller early stage projects.

Although our Q2 revenues were fairly low, our system deliveries to customers like Hawaiian Natural Energy Institute, known as HNEI, ESH and then European renewable energy customer, again, later in the year, which will trigger large milestone payments related to the testing, installation and commissioning phases of those programs.

With respect to sales, in addition to the $1.9 million down payment that we just received, we grow the supply agreement Proterra in May and received the first PO in June for deliveries within January 2013.

We also received the follow-on order for algorithm dynamics from HNEI which I’ll be utilizing two entities that we will be delivering to them for using solar and wind applications.

During the quarter, I also met with HNEI in El Salvador. As you know, we ordered a contract for a 10 megawatt turnkey system there. HNEI continues to show its support for the deal and we’re directly engaged with them to win the necessary and regulatory approvals.

With respect to our proposal activity, we recently down selected the final large turnkey frequency regulation project and had submitted several other projects for turnkey projects. Although the sales process for the motor systems can be quite challenging, customer are becoming increasingly aware of our product capabilities and strengths and inviting us to tender.

As many of you know, we are in the first company to enter the market and especially gratifying our first support for AS, which was tested and validated by chemists, still operating well within existing parameters. This is a testament to our R&D engineering and operations team.

As we look forward with our sales efforts trying to look like equal in our business, for example, China recently issued a policy statement which is supported by the development of LTO and LTO-related technology.

As an early entry name to the LTO battery market, we believe that we will in a good position to drive benefits to policies, all the more so, as we implement our [inaudible].

On that note, we conduct the discussions with a number of meetings to China companies over the quarter who is interested in lithium-titanate based battery systems. Our largest shareholder is based in China has played an instrumental role in our business development efforts there.

Although it’s premature to discuss some of these negotiations in details, I will say that our products are generating strong interest there. With respect to our third topic products, we you all know, Altair focus its products’ gradually in three market segments; namely the grid, transportation and investor market.

Our plan there centered on view to standard LTO marginal designs which were then placed into our standard energy storage systems or into customized products. We will continue on that path and will work to broaden our product offerings, especially for the China market.

We’re also investigating these hybrid technologies as to the pairing of different pipes itself with our LTO products. In addition, we are evaluating the use of other type of sales in marginal design so that we can offer a broader range of products at potentially lower cost.

Another area of focus, of course, is simply on cost reduction. A key element of our strategy is to improve our supply chain and logistics, particularly for our sales in Asia and to reduce our overall manufacturing cost.

On the R&D front, our team continues to put a new cell designs which will improve our energy dense cycle, continue the improvement in these areas. And not only improve their performance, but will also help to drive down their total cost of ownership for their customers, which we believe is a key product asset.

With that, basically, I would like to turn over to Steven Wong, our CFO to provide a quick update on our Q2 activities.

Steven Wong

Thanks, Alex, and good morning to everyone.

For the second quarter ended June 30, 2012, revenues were 454,000 compared to the second quarter of 2011, revenues are 476,000. Growth loss was 620,000 this quarter compared to growth loss of 215,000 in the second quarter of last year.

Operating expenses was $4.4 million in the second quarter of 2012 compared to $3.8 million in the second quarter of 2011. The net loss for the period was $4.9 million or $0.7 per share compared to a net loss of $3 million or $0.10 per share in the second quarter of 2011.

The basic and diluted weighted average shares outstanding for the quarter were $69.5 million compared to $30.4 million for the same period in 2011. Revenues were essentially flat in the second quarter of 2012 while growth margin was increased by $405,000 reflecting an increase of $399,000 in inventory reserve during the second quarter of 2012.

Operating expenses were increased by 609,000 during the three-month ending June 30th, 2012 compared to the three-month ending June 30th, 2011. This increase was primarily due to investments in R&D. Net loss was increased by $1.9 million primarily due to the change in the market value of previously issued warrant.

Increase within research and relevant expense associated with our next generation LTO chemistry and LTO cells, as well as an increase in inventory reserves.

Altair’s cash and cash equivalents decreased by $11.2 million from $46.5 million at December 31st, 2011 to $35.3 million at June 30, 2012. This is primarily due to the $10.8 million of cash used in operating activity during the first quarter – I’m sorry, during the first half of 2012.

The bulk of the cash used in operations went to cover normal compensation and non-labor expenses, and the build-up of work in process inventory related to the fulfillment of customer sales backlog.

With that, I would like to turn it back over to Alex Lee.

Alexander Lee

Thanks, Steven.

Certainly, the financial picture for the second quarter reflects some of the challenges that battery companies state as a whole. Nevertheless, we’re working aggressively to open up new opportunities for the company. And we believe that the China plan will certainly put a big role in our future opportunity.

With that said, I’d like to leave plenty of time for questions. So, I’d like to turn it over to the operator to facilitate the Q&A session.

Question-and-Answer Session


(Operator instructions) Our first question comes from Frank Zhou [ph], private investor. Your line is open.

Frank Zhou – Private Investor

Hello. Hi. This is for Steven, I want to a question. We know that one government is already from the agreement [inaudible]. So, about the land grant, I hope to know whether the agreement is solid and how to estimate the latter intake into your company, how to calculate that land grant. So, we’ve heard about these 50 years of free land usage already.

Alexander Lee

In China, a commercial land grant is typically for 50 years. So, it’s a very standard land grant. With respect to the total land that’s being granted, it’ll be up to 330 acres. So, it’s a very large piece of land.

And if you were to go to the proposed technology part, it is all essentially brand new, like raw land. Nothing has been constructed on it at this point.

So, essentially, the process that we’re engaging with them is to work on various permits, approvals and so forth showing our building designs, our concepts and essentially going through that standard process.

And what the city will do is essentially release the land in favor to us. So, this first faith that we’ll have some groundbreaking on is essentially for building that. The government is actually providing to us as part of this contract, which will review our showroom and sales office.

As our permits are approved, then we’ll get additional land grants of 330 acre amounts overtime, and it’s quite a benefit for the company.

With respect to the value of that land, that’s an excellent question. And actually, that’s something that we have to engage in a formal appraisal process so that we can actually properly book that to our consolidated financials.

So, that process is about to start, so I don’t have a firm answer for you on that. But that is something that we’ll be reporting on in future quarters as the permit process get finalized and get our final approvals for various portion of that land.

Frank Zhou – Private Investor

Okay. Thank you. Can I ask another question?

Alexander Lee


Frank Zhou – Private Investor

The second question is about the current cash position because we know on Chinese company, YTE purchased Altairnano last year. There are provisioned items that about 30 million should be reserved and used in China product. But right now there will be concern about the maritime operation. Do we still have the cash to attend the maritime operation?

Alexander Lee

Yes, that’s a good question.

Essentially, the investment transaction through Canon Investment Holdings, that Chung Energy is an affiliate of. Basically, that transaction totaled $57.5 million. And the use of proceeds included basically $32 million that would be allocated to the China plant.

Now, as you probably know that our cash flow has transferred over to our China entity. It’s a wholly owned subsidiary of the company. And that cash will be used for various activities related to not only the move on manufacturing concept but also to our general operations throughout China.

With respect to the U.S. operations, the board of directors of the company, the investors, all the, basically, stakeholders, are fully committed to funding the U.S. operation. So, although it may seem that the U.S. side of the company is very cash-constrained, we will utilize a number of different methods to fund the U.S. operation.

Number one, we will be entering into numbers in our company agreement. This is already been approved at the board level. We’re just finalizing some tax details. But essentially, those intercompany agreements will allow us to essentially transfer cash from China back to the U.S. to fund our continued operations.

So, for example, ways in which it’s going to occur. It would be the sale of products to our subsidiary company, the sale of materials, the provision of engineering services. There’s a whole host of things that we can do to essentially transfer some funds back.

In addition to that, of course, we’ll be looking at different funding opportunities. One of the items that we just recently will be disclosing is essentially a small mortgage loan that we received or about to receive. We entered into that agreement yesterday. So, that will bring some cash base again to help support the operations.

And then going forward, then certainly we will have to work at other financing opportunities because the company will acquire financing not only from U.S. operation but very likely for the China operations as well just as a general proposition.

Now, of course, we want to ramp up revenue, and we’re aggressively focused on that that the company will still have working capital needs that need to be addressed. So, in general we will have to pursue a number of different financing opportunities.

Frank Zhou – Private Investor

Okay. Thank you.

Alexander Lee


Frank Zhou – Private Investor

The third question, can I ask?

Alexander Lee

Yes, that’s fine.

Frank Zhou – Private Investor

Yes. The third question is about U.S. assigning – we know the YTE also made particularly in China. Do you have other plans to sell their production in American market?

Alexander Lee

YTE’s products into the U.S.? Is that the question?

Frank Zhou – Private Investor

Yes, yes. Do you want to [inaudible]? And I know U.S. to import of their product and deciding – they’re actually deciding into U.S. market.

Alexander Lee

That’s certainly a possibility. That’s one that we’re investigating. As you know, we’re focused on three kind of market segment, the grid, transportation and then, basically, industrial type customers.

And if there are products, not only from YTE, but other sources that fit into those market segments and into our customer base, then certainly that is something that we will pursue. And we’re not locked in to just necessarily sell just only our products because we do have to be aggressive about generating revenue and generating very quickly.

So, that is a possibility. And certainly, YTE, with respect to the Chinese market as part of the supply agreement that it’s struck with our company, it has the right to sell our products in China. So, certainly, we will have our sale efforts. And on the ulterior side, YTE will also be selling products, our ulterior products in China depending on how it fits into there and the customer banks as well.

Frank Zhou - Private Investor

Okay. Thank you.

Alexander Lee

You’re welcome.


Thank you. (Operator Instructions) Our next question comes from Richard Voight [ph], private investor. Your line is open.

Richard Voight – Private Investor

Yes. Thanks for taking my call. Could you still elaborate a little bit more on when you think the introduction of the Proterra buses will take place here in the United States and some of the estimates on what kind of sales volume they anticipate?

Alexander Lee

Well, Proterra has been introducing or has already introduced their buses. They’ve basically been working with municipalities across the country. They’ve made some recent announcements about some new sales that they have.

And certainly, they’re in a tough market because the EV industry is not ramping up as quickly as many would like. And certainly, the economic conditions are difficult. However, you have a solid business proposition, their products have been functioning very well and that also speaks to how well our batteries have been doing because the key part of their strategy currently is to basically wrap the charges of those buses.

And I believe that our battery is rather unique in that regard to do wrap the charging, for instance, and not have to hurt the battery. So, those questions are in operation and I know that they are aggressively pursuing other opportunities. And certainly, I think the statements that we’re funding are key component of how we sell those buses into the market at this point.

I know that they’re making a very solid strive introducing the cost of the systems. And they’re doing quite well, I think, by their investors.

With respect to projected sales volumes, I really can’t comment much about that. I think they are in a very competitive industry. And as such, they really do like to guard kind of their competitive position, and I’d like to respect that.

We are engaged very well with them and are currently going through some various programs to help support their current requirements. But with respect to our orders from Proterra, these are really things that fall into the 2013 timeframe commencing the January timeframe and then cycled throughout the year.

So, it’s not –


Thank you for your patience, ladies and gentlemen. Mr. Lee, please proceed.

Alexander Lee

I’m very sorry about that disconnection there.

Going back to the Proterra discussion, basically, we are engaging some efforts to support their activity currently with respect to the orders, orders are things that we think we’re falling to the 2013 timeframe starting in January.

And due to the competitive nature of the business, they do like to close their projections and so forth. And we respect that issue. So, we can’t really comment too much on their sales projections and so forth at this point in time.

They are definitely will engage in the sales process and want to reach some orders. They have very good support from the investors and we do see that relationship with one as being very important to us as a company.

And certainly, the fact that economic growth for quite some time speaks to the durability and performance of the batteries. So they have great reference in customer tools.

Richard Voight – Private Investor

Yes. Well, I know that they’re partners with some other really highly respected component manufacturers.

One other question, if you don’t mind, about the EPS side of thing. I know that there was a time when you were working with the navy for EPS system so you keep your second generators offline for fuel saving.

Now, that seems to be very lucrative market. And then, of course, when you guys had some changes in your nationality, or whatever, as far as your country status, those contracts literally.

Are there any other possibilities in the product line doing large scale products’ and services for companies that could result in literally tens and millions of dollars in sales on either line conditioning or EPS type of product?

Alexander Lee

Well, in terms of – I mean, that’s something we certainly are looking at. And certainly with respect to the China market, there are things popping up that might fall out of the typical things we’ve done in the past, which we’re taking very hard lookout.

So, certainly, from a product standpoint, and then we will be very entrepreneurial with respect to looking at the market and seeing what the customer requirements are.

With respect to that military opportunity that you mentioned or the past contracts that we have, it is unfortunate that we have to essentially release for those contracts because of the change in ownership structure in the company.

In any event, we are looking at ways in which we may be able to get into the portion of that business. We’re not precluded and selling to the government, per se, which is that thing with respect to military increase sensitivity there.

So, we are looking at ways in which we will not be able to partner with other company and selling to various markets that perhaps it would be a little bit more difficult to sell on our own. So, there are number of initiatives there and we’re taking a very hard look of how we can leverage not only our existing product line or sales and modules, but also how we might be able to incorporate other technologies such as, let’s say another company’s lithium sales and incorporate them into, let’s say, a natural design, utilize in that system and then these other products’ that can complement what we currently have.

With that being said, we’re trying to do this in a very focused way so that we’re not going to scatter all of that. The key focus is to identify the customer comparison, which products that we need.

And certainly, in the China market, our investor has been extremely helpful in introducing this to us and some really key customers or key company would like to be a potential customer for us. So, the discussions have been very positive. And I hope that we can close some deals from that.

Richard Voight – Private Investor

Yes, that would be great. That would be great.

Any kind of revenue projections in the next 12 months?

Alexander Lee

At this point, it’s a little bit hard to say, I’d like to kind of reserve a comment on that. And certainly, that’s something that all investors would like to hear about.

I think given the very fluid nature of things happening in China, it is a bit difficult to predict. I will say that with respect to our current customer base, essentially, four large energy storage systems in the pipeline which we’ll be commencing deliveries on starting the next quarter until the early part of next year.

So, that will essentially provide some needs to the company.

Of course, we just got its down payment from China of $1.9 million in EBITDA this quarter. Obviously, there are additional follow-on orders that are part of the Wu’an contract and also Handan contract, which will provide some additional revenue.

And the key component of that contract was for the sale of energy storage systems, and this is where we have to essentially define what that product will be with respect to the key specifications and duty cycles and so forth.

The moment we do that, then, in the City of Wu’an, for example, we’ll be placing orders. So, there are existing things in the pipeline that we should materialize over the course of the next year. And then certainly, we’re looking at a number of large energy storage system project that we’re bidding on.

And the good news is tenders are popping up in a number of different places, which is a very positive sign that the frequency regulation marketing out there. Certainly, replace some challenge in the U.S. because of the natural gas plants and so forth. But the proper tending is now materializing. It’s a good sign that the market is kind of coming back a bit. So, that’s part of it.

Richard Voight – Private Investor

Okay. Well, that’d be great. I’m looking forward to hear as you’re making some money.

Alexander Lee

Same here. Thank you for your question.

Richard Voight – Private Investor

All right. Thank you.


Thank you. (Operator Instructions) Our next question comes from Frank Zhou, private investors. Your line is open.

Frank Zhou – Private Investor

Hi, this is me again. I do have a question about the turnkey project in China. So, we know the YTE and Altair both find the agreement with one government. So, are you talking about the ownership of the page for this project? Is that 100% owned by China? Or the land, the 100% granted to outside China?

Alexander Lee

With respect to YTE, it’s my understanding that they signed some type of agreement with the [inaudible] as well. Actually, when we have the signing ceremony in Hong Kong sponsored by Hundan City, it was actually attended by 45 companies, I believe, that also signed economic development yields for a wide range of different types of things.

And essentially, YTE did some type of deal that I’m not really familiar with the details. YTE is a separate company from us and my core focus is going out there. So, I’m not really empowered or familiar with the details in talking about their contracts and so forth.

But with respect to Altair, the contract that we have with the City of Wu’an and Handan, it is Altair’s specific contract. It is something that is land grant associated with that contract will be going to our company.

It’s not, like, owned by YTE. It’s specifically 100% Altair project where YTE or Canon occasionally comes in, it’s just simply through their equity holdings. In Altairnano, it’s not through that contract. So, they have a straight look in the company, but or project is specific to that.

Frank Zhou – Private Investor

So you mean the land the government have grant is 100% belong to us, right?

Alexander Lee

Yes, it’ll be owned by our wholly owned subsidiary in China. Yes.

Frank Zhou – Private Investor

Okay. Thank you very much. Okay.

Alexander Lee

You’re welcome.


Thank you. Our next question comes from Patrick Utter [ph], private investor. Your line is open.

Patrick Utter – Private Investor

Thank you. Well, good morning. Could you give us an update with the agreement that you have in El Salvador?

Alexander Lee

Oh, sure. So, actually, I was a board of the company for some time prior to becoming CEO. And certainly, El Salvador was one of the hot topic with professions over many, many different board meetings.

So, basically, once I became CEO I thought it would be very important for me to go see firsthand what’s going on. So, I visited with the president. And what became very kind is that from the customer perspective, they’re certainly sold on the deal, they very much want the project to proceed and they’re taking actions on their side to support the project, for instance, how they located the site where they would like to put our systems.

They really want frequency regulation in their marketplace where they do see a way to certainly save a lot of cost for the utility. And there are strong interests on their part to pursue.

We do have the contract with HNEI. And what’s essentially holding us up is the fact that we still need to go through the regulatory approval process. And so, there is where – again, it’s providing a support to basically go through that approval process to demonstrate the relevant authority that frequency regulation would work, the model would work, the economics would work.

And so, there’s certainly quite a bit of just explaining and educating the authorities on its whole concept because it is new for that market, and in fact it’s new for many, many market. So, it has been a challenging process. But they’re very much supportive of our efforts and we’re working with a number of local entities to – if we push that deal through.

From a timing perspective, however, it is very hard to predict because the approval process as we’ve seen has dragged out quite a long time. And so, I wouldn’t really want to hassle against this point, but I will say from a customer perceptive, they’re doing everything possible to make this deal happen and go forward.

Patrick Utter – Private Investor

Thank you.

Alexander Lee

You’re welcome.


Than you. Our next question comes from Robert Lenton [ph], private investor. Your question please.

Robert Lenton – Private Investor

Yes. My question, I’m just trying to get a sense of the overall strategy going forward for, say, next three to five years. Is it more a strategy to kind of leverage relationships in China to drive growth?

I know it penetrate the Chinese market. Or is it more of a focused differentiation? I’m just trying to get an – I just didn’t really have a good sense for the next three to five years going forward what this company has overall strategy to drive growth. And maybe you could comment on that for me.

Alexander Lee

Sure. We definitely view China as an important part of the long-term strategy and there are several reasons for that. First, I think we have a differentiated technology with or within this type [ph].

And one of the interesting things about the Chinese market is that they basically come up with policy statement that encourages involvement of LTO and LTO products. So given that’s the case and given how the Chinese company operates, I think that offers a fairly good position, certainly, because of our kind of – or we jump into that market or the LTO market to basically gather some of the things that may come out about in China that are relating to LTO.

Another key part of the China market, or rather the China strategy is it builds for the opportunity to sort of consolidate our supply chain. Currently, we’re producing LTO powder in Reno, Nevada. We have cell production in Asia. Those cells migrate back to the states and then get assembled into products and then those products then shipped, not only domestically but internationally.

So, as you can see from the logistics standpoint, that is not the ideal way to conduct the supply chain. So, certainly, we achieve portion of our product line. What we’re trying to do in China is to consolidate our supply base and our materials, our cell production, at least get everything very close to them.

So, ultimately, that will produce lower cost risk. And that’s the key component of our strategy going forward because, certainly, it’s a very competitive marketplace. And companies have made unfavorable comparisons between or technologies and other in the cost basis.

But we believe that by reviewing the cost of our product and also changing the way in which we market to our customers, to establish a backlit because of your much, much higher cycle of the products that we could actually reduce the total cost of ownership. We keep great customers and investor applications.

And certainly in larger vehicle, such as buses where you have very high mileage requirement, but all batteries actually are significant and cheaper in the long run. And then we can cross the ownership. So, the China manufacturing piece will help drive down that initial cost but then certainly help them total cost of ownership issue.

With respect to kind of the long-term marketing strategy, we see significant opportunities in China simply because they have a very big push into renewable energy.

As you know, they push very hard into solar energy, wind energy, and we believe that energy storage is an opportunity that we’re really growing in that market, which is why you see things such as the recent transaction between a leading Chinese battery company that they want you to.

A lot of that is geared towards the energy storage system market. So, we do see some strong demand there that we materialize in the future. But the large part that’s driven by just basic need, which is the fact that China just consumes a lot of fuel and it has to import a lot of fuel. And for that, they help you really look at renewable sources.

So, you see some interesting opportunities there from that perspective and then certainly from an industrial application standpoint, they are just some very, very large companies in China that could utilize a high-powered battery sources, high energy batteries. And LTO is very strong in that particular area. So, again, that’s really important in the Chinese market.

With that being said, we’ve been engaged in activities in Europe. We have some basic demonstration projects or test projects going with the industrial type companies in Europe, which we believe can materialize into larger opportunities as well provided that we execute well and continue to demonstrate the strength of our technology.

And likewise, in central, in Latin America we’re seeing an increased interest in the notion of frequency regulation, again, because of the high-cost of fuel. But again, a lot of this international type deals do have very long lead time and are not necessarily easy to win, but nonetheless we are still trying to move our product into areas where the high-fuel cost could guide the demand probably in a large energy system.

So, it kind of sounds like I’m all over the place. We couldn’t expect to that. But in the long term, we are trying to drive cost, cost reduction is a huge piece of our strategy and certainly to leverage our relationships in China to get into that market and then continue our focus with additional customer base.

And all the customers that have shown strong interest in the high-power battery, long cycle life battery, which is where LTO have some horse strength.

Robert Lenton – Private Investor

Okay. All right. That’s all I needed. All right. Thank you.

Alexander Lee

Sure. Thank you.


Thank you. Our next question comes from Ken Yang [ph], private investor. Your question please.

Ken Yang – Private Investor

Yes, good morning, Mr. Lee. I don’t know if you recall, but we had a conversation several weeks ago. At that time, I was quite critical at what I perceived is a lack of activity in the company.

I now see that there are actually was quite a lot going on that, of course, you couldn’t tell me about because of the regulation, full disclosure regulations. And I’m very encouraged to see how much activity is going on, and so, congratulations on that.

I guess what I’m going to ask is I’m hoping that in the future there can be some communication between out there and its stockholders more frequently than just at this conference call. Is that in the works at all?

Alexander Lee

Yes. You raise an excellent point because I think we have been quite for a little while, well, perhaps a long while. I think certainly some of the changes in management and changes that are associated with the new investment and so forth, we create, yes, a little bit of chaos for the company to be frank.

Certainly, from my perspective, I do see the need to rebuild credibility for the company. And that’s going to require increase communication. Certainly, there’s a lot of great stuff that’s happening within the company that I would love to talk more about that it’s often difficult to.

But we are putting together a PR strategy to help address our credibility issue and then help build the sort of knowledge based about our company and what’s actually happening and what are our intentions are because certainly there’s been some, either a lack of communication or miscommunication about what we’ve been up to.

So, with that being said, I just want to stress a simple point that we have a great team. They have been working extremely hard to pursue new applications and certainly working very hard to execute our current customer deliverables.

And unlike a lot of technology companies where it’s simply like an idea on paper, it’s really gratifying to see that we have a technology that actually works. Our system – I would inform a customer in Altair and abused a heck out of those batteries and saw that there can be quite a bit. And certainly having that AF system in operation till this day, the one that we’re subject to the report, it’s, again, a great statement about our product.

So, to your point, we definitely need to make a bit more and we definitely need to increase our communication with that, not only our customers but certainly our shareholders.

Ken Yang – Private Investor

Well, I’m quite encouraged by that. And again, congratulations. I have to say because I was critical before, so I want to balance that a bit.

I can’t really remember in all the conference calls I’ve listened to over the years when there has been so much activity apparently going on in a relatively short period of time. So, if that continues, that’s very encouraging. And again, congratulations, and thank you.

Alexander Lee

Yes. Thank you for those comments. And certainly, we couldn’t have done it without the team we have there. I understand also in China now. It’s a great group of people.

So, we definitely want to do some good things with this company.

Ken Yang – Private Investor

Okay. Thank you.

Alexander Lee

Thank you.


And there are no further questions in queue at this time. I would like to turn the call back over to Mr. Lee for any closing remarks.

Alexander Lee

Well, thank you very much for the opportunity to speak to you. I think we’ve got some great questions, and I think you’ve definitely highlight some of the issues and challenges that we create going forward.

But certainly, it’s a great opportunity that we have as a company, certainly with China here. It’s something that we wanted to be very hopeful about when they first instruct the deal. But we wanted to take the cautious approach because I know that generally in the marketplace that there are maybe some skepticism about opportunities related to China.

Certainly, a lot of companies claim how large that market is and what they can do there. But we are taking a very cautious approach, although we are aggressively moving forward. We are keeping our eyes wide open with respect to the challenges there, but also with all of our projects.

I think the key thing that we are trying to do is make sure that we are rationalizing each and every project that we embark on, that there’s a strong business case for the things that we do.

And certainly, there’s a key learning about reducing cost because the revenue base for our company hasn’t been sufficient to support our operations. So, certainly, the entire team in Altair is extremely aware of that and is addressing that issue. So, the focus is certainly to, you know, ramp up revenue and these cost.

I think that’s a key way to – and in fact, those I think are sustainable. So, I guess I’d like to emphasize with the team, it’s very much aligned with the opportunities. We are very aligned with our investors in terms of our major shareholders in the board.

So, having that alignment certainly makes it much, much easier to push forward some of these challenging projects. So, with that being said, I thank you all for your time and I look forward to having this conversation again in the future.

Thank you.


Thank you, sir, and thank you, ladies and gentlemen, for your participation. That does conclude your program. Thank you for your participation, and have a wonderful day. You may disconnect at this time.

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