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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 20, 1996
LITHIUM TECHNOLOGY CORPORATION
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 1-10446 13-3411148
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State or Other Jurisdiction Commission IRS Employer
of Incorporation or Organization File Number Identification No.
5115 Campus Drive, Plymouth Meeting, PA 19462
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Address of Principal Executive Offices Zip Code
Registrant's telephone number, including area code: (610) 940-6090
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Former name or former address, if changed since last report
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Item 5. Other Events.
On December 23, 1996, Lithium Technology Corporation (the "Company")
sent to its shareholders a letter containing certain current information
concerning the Company. A copy of the form of the letter is attached as an
Exhibit hereto.
Item 7. Financial Statements and Exhibits
10.35 Form of letter to shareholders, dated December 20, 1996.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
LITHIUM TECHNOLOGY CORPORATION
By: /s/ David J. Cade
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David J. Cade
President and
Chief Operating Officer
Date: December 23, 1996
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[LITHIUM TECHNOLOGY CORPORATION LETTERHEAD]
December 20, 1996
Dear Fellow Shareholder:
Last May we provided a summary of where we stood with respect to certain issues
critical to the success of your Corporation. This letter is to give you an
update on where we stand today and a current assessment of the market
opportunities.
Market Overview
Company President Mr. Dave Cade, who attended the 1996 Power Conference along
with some 650 other industry representatives, came away with the conclusion
that there is a growing interest in solid state lithium polymer electrolyte
batteries as portable electronics users increasingly seek longer run times and
lighter weights at reasonable prices. The best, but most expensive, power
source presently available for portable electronics devices is liquid
electrolyte lithium-ion batteries, pioneered by Sony. It was reported that the
notebook computer demand alone for this product is in the 600,000,000 cells per
year range while the current supply is in the 150,000,000 cells per year range.
Original Equipment Manufacturer (OEM) attendees at the Power Conference
specified the following priorities for rechargeable batteries: 1) Safety; 2)
Energy Density; and 3) Cost. Based upon trial runs with our Demonstration
Manufacturing Facility, we believe that LTC's polymer electrolyte lithium-ion
cells will offer both a safety and cost advantage over liquid electrolyte
lithium-ion cells at the same or better energy densities.
The consensus at the Conference was that lithium polymer battery technology
today is essentially a small company initiative and that the large battery
companies would come aboard after the technology is established in the
marketplace. This view supports the LTC strategy to establish a partnership
with a large global company such as Mitsubishi Materials, which desires to
become a battery manufacturer using LTC's technology platform.
Finally, it is your management's belief that the intelligence gathered at the
Power `96 Conference supports information gleaned from other sources that
although a number of companies are pursuing the lithium polymer opportunity,
nobody appears to have a competitive advantage over LTC, particularly in cost
efficiencies in bringing the next generation battery technologies to the
marketplace.
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Status of Technology Development
The Company's lithium polymer cells are in various stages of cycle life
testing, and so far are meeting or surpassing expectations. Your management
team has always felt that the firm's sustainable competitive advantage is the
integration of its patented web structure cell design and the related
proprietary manufacturing processes. In combination they are the keys to
higher energy densities at lower unit production costs. Thus a key step in
your corporation's evolution was the validation of this premise through the
acquisition, upgrade and prove-in of a continuous flow Demonstration
Manufacturing Facility (DMF). The DMF was installed in March, 1996 and has
been undergoing rigorous trial coating and lamination runs. Both lithium alloy
polymer cells and lithium-ion polymer cells have now been successfully produced
on the DMF.
We are on track with our Business Plan to furnish cells for testing by selected
OEMs in the first quarter of 1997, followed by the assembly of cells into
prototype battery packs to meet the specifications of one or two top OEMs. The
OEMs are eager to test lithium-ion polymer batteries as the next generation
technology.
Strategic Alliances
Mitsubishi Materials, the industrial/manufacturing part of the Japanese
Consortium, has had an Engineer/Scientist assigned to the Plymouth Meeting
Technology Team since May, 1996. This individual has played a key role in
managing the interfaces with the Mitsubishi Materials laboratories in Japan,
where LTC cells have been subjected to intensive testing utilizing
sophisticated analytical equipment such as Scanning Electron Microscopes.
Through this testing in Japan, we were pleased to confirm that our lithium
alloy polymer cells do NOT grow dendrites (which is a common cause of shorting
in lithium metal batteries) even after 250 cycles. We expect to reach
agreement with the Consortium on their next stage of commitment and financial
support by April, 1997, the one year anniversary of the alliance.
Your Company is also continuing to explore potential collaboration scenarios
with a number of U.S. and foreign companies which are interested in various
aspects of our patented and proprietary technology.
Funding
The Japanese Consortium investment in LTC was the primary source of funding for
operations during 1996, with residual private placement funds covering the
first several months of the year and a recently signed bridge loan covering
December and the first quarter of 1997.
In October 1996, we announced that the Company had executed a commitment letter
with a New York underwriter to raise $7-10M in a secondary public offering. As
a result of a number of factors, including the current price levels of the
Company's common stock, it
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is currently deemed inappropriate to complete the secondary public offering at
this time. The Company does intend to pursue a secondary offering at the
appropriate time in 1997, depending upon market conditions and the continuing
progress of the Company's technology development efforts. The purpose of this
offering is to raise the capital necessary to convert the DMF into an initial
production facility in early 1998, and install a larger pilot manufacturing
line which would position the Company to begin full commercial production in
early 1999. Your Company's management team is exploring several options for
further interim funding to repay the $1.75M bridge loan and provide short term
working capital.
Your Company recently submitted two proposals to the U.S. government -- one to
NASA as a subcontractor and one to the U.S. Army as a prime contractor -- on
lithium polymer battery programs. While the bids are highly competitive and
other companies already doing business with the government may be in a better
position to win, the requirements of these programs appear to be a good fit for
our technology and manufacturing process. Moreover, since the government focus
is on next-generation technology, this "fit" further illustrates the potential
of our intellectual property. Both contracts are due to be awarded within 60
days. While the combined potential revenue to the Company for both programs is
about $1M, the credibility value of such an award would be equally important.
Based on the progress to date in achieving key milestones in our Business Plan
and further anticipated progress in 1997, your management team felt it was time
to engage the services of a corporate development consulting firm to help
better position LTC in targeted public and private investment circles,
stressing the Company's technology strengths and market potential.
Accordingly, we have recently engaged the financial public relations firm of
Consulting For Strategic Growth, located in New York.
In summary, because of the solid progress in moving the technology forward and
the expanding scope of target market opportunities, we at Lithium are
enthusiastic about your Company's prospects for the New Year. We would also
like to sincerely thank you for your continuing support.
Sincerely,
/s/ THOMAS R. THOMSEN
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Thomas R. Thomsen
Chairman and CEO
enclosure: Company fact sheet
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[LITHIUM TECHNOLOGY CORPORATION LOGO] OTC Bulletin Board: ("LITH")
__________________________________________________________FACT SHEET____________
5115 Campus Drive 4TH QUARTER - 1996
Plymouth Meeting, PA 19462-1129
(609) 940-6090
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MARKET CAPITALIZATION . . . . . . . . . . . . . . . . $17 MILLION
SHARES OUTSTANDING(1) . . . . . . . . . . . . . . . . 16.8 MILLION THE COMPANY HAS A PROPRIETARY
SHARE FLOAT . . . . . . . . . . . . . . . . . . . . . 11.1 MILLION (19 PATENTS ISSUED) TECHNOLOGY FOR
INSIDER OWNERSHIP . . . . . . . . . . . . . . . . . . 31% LOW-COST LITHIUM-POLYMER
INSTITUTIONAL OWNERSHIP . . . . . . . . . . . . . . . 24% RECHARGEABLE BATTERIES.
FISCAL YR END . . . . . . . . . . . . . . . . . . . . DECEMBER 31
RECENT STOCK PRICE . . . . . . . . . . . . . . . . . $1.00 THESE LIGHT-WEIGHT, ULTRA-THIN,
52 WEEK RANGE . . . . . . . . . . . . . . . . . . . . $1.00 - $12.90 LONG RUN TIME BATTERIES WILL ADDRESS
THE HUGE AND GROWING MARKET DEMAND
FOR PC NOTEBOOKS AND CELL PHONES.
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(1) - Does not include 4,177,970 Warrants and Options outstanding.
DOES THIS SOUND FAMILIAR?
Boarding an LA bound plane at O'Hare, the typing and editing process
commences at a feverish pace.
Four hours till touchdown; five hours of work. Too bad the
battery won't make Denver.
IT'S TRUE.
The best batteries today are unable to survive even
a portion of a normal workday;
say nothing of the demands of an executive road warrior.
BATTERY MARKET
The global market demand for a small, lightweight, ultra-thin, long run time
rechargeable battery is enormous and growing at a phenomenal rate as increased
wireless usage and miniaturization of electronic devices continue unabated.
Lithium Technology Corporation is addressing the $4 Billion advanced
rechargeable battery market, which is growing 25% annually. Portable electronics
is the fastest growing segment due to the proliferation of mobile computing and
wireless communications applications, many of which are growing at rates in
excess of 35% annually.
THE COMPANY
Lithium Technology Corporation, (OTC Bulletin Board: LITH) has completed the
design of a proprietary approach to manufacture high performance, rechargeable
batteries, which are light weight and low in cost. The company anticipates
scaling up production to volume shipments in 1998.
STRATEGIC ALLIANCE
In March of 1996, the Company entered in to a Technology Development Agreement
with Mitsubishi Materials Corporation and Mitsui & Co., Ltd.. This Consortium
is providing funds (initial investment was $2.4 Mill for 4% of the Company) and
technical resources to help the Company complete development of its high energy
battery for portable electronics applications. The Agreement gives the
Consortium exclusive option rights to license the Company's technology for
manufacturing in the Far East and Oceana and co-exclusive rights to manufacture
in Europe and the Americas, where the strategy includes establishing joint
venture manufacturing between the Company and the Consortium.
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C.F.S.G. For Further Info. Contact:
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CONSULTING FOR STAN WUNDERLICH, CHAIRMAN (800) 625-2236
STRATEGIC GROWTH, LTD. JOHN HARBAUGH, EXEC. VP (888) 425-0234
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Stan Wunderlich @ 8 The Hemlocks - Roslyn Estates, NY - 11576 -
FAX (516) 625-4523 - Cell (516) 729-3714
John Harbaugh @ 41 Kirkby Trail - Fairport, NY - 14450 - FAX (716) 425-0235 -
Cellular (716) 752-2100
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CORPORATE HIGHLIGHTS
SUBSTANTIAL MARKET OPPORTUNITY
With more than $1 billion in annual revenue growth, there is room for several
new players to emerge without significant impact on the market share of
existing battery companies.
LOW COST MANUFACTURING METHODS
The Company's key competitive advantage lies in its space-age composite battery
structures combined with its low-cost manufacturing approach, which uses
commercially proven process methodology and equipment found in other
industries.
SIGNIFICANT PATENT POSITION
LITH currently has 19 patents issued and 10 pending, covering all aspects of
lithium battery construction and manufacturing processes.
EXPERIENCED MANAGEMENT TEAM
LITH has a strong management team and experienced technical staff with relevant
experience in battery technology, thin-film manufacturing processes,
commercialization, finance, international business and marketing.
THE COMPANY'S TECHNOLOGICAL EDGE
The Company's patented and proprietary lithium-polymer technology uses high
performance fibers in composite battery structures and involves low-cost web
handling manufacturing methods. The Company's technology is highly flexible
and LITH intends to pursue both lithium-metal polymer and lithium-ion polymer
chemistries for specific portable electronic applications. The Company has
begun scale-up with its new Demonstration Manufacturing Line which is currently
undergoing trial runs for coating and lamination of test cells.
TECHNOLOGY ADVANTAGES
Weight: Can deliver up to 2-3 times the energy capacity of NiCad and NiMH
per unit of weight.
Volume: Energy per unit of volume up to 3-4 times that of conventional
rechargeable batteries.
Design: Manufactured in flexible sheets which can take virtually any shape
or size.
Rechargeability: Over 500 deep discharge cycles with no "memory effect".
Self Discharge: Improved monthly self discharge rate of 1% compared to
current rates of 15-25% with other battery types.
Safety: Improved safety features include safety/carrier tape, solid
polymer electrolyte composite and soft pouch-like packaging.
Low Cost: The product relies on readily available materials and can be made
in a simple, continuous flow process, using proven "web handling" technology.
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BALANCE SHEET HIGHLIGHTS: AT OCTOBER 31, 1996 (Unaudited)
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Cash on Hand . . . . . . . . . . . . . . . . . . $ 2,093,000
Total Current Assets . . . . . . . . . . . . . . 2,103,000
Total Assets . . . . . . . . . . . . . . . . . . 3,415,000
Total Current Liabilities . . . . . . . . . . . . $ 3,393,000
Long Term Debt . . . . . . . . . . . . . . . . . -0-
Shareholder's Equity . . . . . . . . . . . . . . 22,000
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MANUFACTURING COST COMPARISON
[CHART]
BATTERY CHEMISTRY
RECENT PRESS RELEASE: OCTOBER 28, 1996
... THE COMPANY ANNOUNCED THAT IT HAS CLOSED A CONVERTIBLE NOTE FINANCING OF
$1.75 MILLION FROM NON-U.S. BASED INVESTORS.
With the exception of the historical information contained in this Fact Sheet,
the matters described herein contain forward-looking statements that involve
risk and uncertainties that may individually or mutually impact the matters
herein described, including but not limited to product acceptance, economic,
competitive, governmental, results of litigation, technological and/or other
factors, which are outside the Company's control. Investors are encouraged to
read and evaluate the Company's reports and registration statements on file
with the SEC or obtainable from the Company upon request.
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CFSG: Stan Wunderlich @ 8 The Hemlocks - Roslyn Estates, NY - 11576 -
(800) 625-2236 - FAX (516) 625-4523 - Cell (516) 729-3714
John Harbaugh @ 41 Kirkby Trail - Fairport, NY - 14450 - (888) 425-0234 -
FAX (716) 425-0235 - Cellular (716) 752-2100
