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Altair Nanotechnologies Inc. (NASDAQ: ALTI), a leading provider of advanced nanomaterials technology for use in energy, life sciences and industrial applications, today announced that it has signed a new Principles of Agreement Letter with Phoenix Motorcars, Inc. Under the terms of the agreement, Altair will ship 47 battery packs purchased by Phoenix in 2007 to Phoenix for use exclusively in demonstration vehicles. In addition, Altair entered into a letter of agreement with Phoenix formally terminating the existing supply agreement and mutually releasing each other from any claims under such agreement.
In the first quarter of 2008, Altair offered a warranty replacement of the 47 battery packs to Phoenix because exhaustive computer modeling studies conducted by Altair suggested a remote chance of pack failure under certain conditions based on the configuration of the modules that comprised the packs. "We are pleased to have worked with Phoenix to resolve this concern in a timely and practical manner that allows them to use the original batteries with a simple safety system addition," commented Altair CEO Terry Copeland, Ph.D.
"We look forward to getting the 47 vehicles on the road by October," said Phoenix CEO Daniel J. Elliott. "Phoenix remains convinced that consumers will rapidly accept this new product based on its game-changing performance, especially given their necessary focus on gas prices and the country's continued dependence on foreign oil. We are currently working with Altair to obtain battery modules for future vehicle production runs, and we are excited about our ongoing partnership."
Based upon the Principles of Agreement Letter, in the second quarter of 2008, Altair reversed the $2.8 million warranty liability associated with this transaction and wrote off a $1.7 million note payable due to Altair from Phoenix. The result of the transaction, which is outlined in the Principles of Agreement Letter filed July 24, 2008 with a Form 8K, is a credit to cost of goods sold of $2.8 million and a debit to operating expense of $1.7 million for a net positive impact of $1.1 million to net income in the second quarter 2008 financial results.
In addition to the approximate net impact of the $1.1 million credit, the demonstration vehicles are expected to qualify for zero-emission vehicle ("ZEV") credits under the California Air Resources Board (CARB) Type III program. Altair will receive ten percent of the monetized value of any ZEV credits awarded for cars containing its battery packs. Each car qualifying under the Type III program will generate forty ZEV credits in calendar year 2008.
ABOUT PHOENIX MC, INC.
Phoenix MC, Inc., a privately-held Delaware corporation, headquartered in Ontario, California and doing business as Phoenix Motorcars, has been an industry leader in the development of battery-electric, freeway-speed vehicles since 2001. The mission of Phoenix MC, Inc. is to manufacture zero-emission vehicles, including SUTs and SUVs, to reduce the toxic emissions from the largest contributor to air pollution, personal automobiles. For more information, visit www.PhoenixMotorcars.com.
About Altair Nanotechnologies Inc.
Altairnano is an innovator and supplier of advanced novel, ceramic nanomaterials. A seasoned management team complements Altairnano's leading edge scientists, with substantial experience in commercializing innovative, disruptive technologies. The company has developed nanomaterials for the alternative energy, life sciences and performance materials markets based on its proprietary manufacturing process. This process also provides the foundation for its innovative AHP pigment process.
This release may contain forward-looking statements as well as historical information. Forward-looking statements, which are included in accordance with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, may involve risks, uncertainties and other factors that may cause the company's actual results and performance in future periods to be materially different from any future results or performance suggested by the forward-looking statements in this release. These risks and uncertainties include, without limitation, the risks that Phoenix will be unable to monetize the value of any ZEV credits associated with the battery packs for various reasons, including the absence of a market, technical or other factors; that the planned continuation of a supply relationship with Phoenix will not materialize for various reasons, including potential issues related to design, cost, performance, finances and other factors; that the development and commercialization of the company's battery technology and products will not progress as expected for technical, financial strategic or other reasons; that any products developed will not perform as expected in future testing or real-world applications; and that even if full commercialization occurs, products sales may be limited and costs associated with production may exceed revenues. In addition, other risks are identified in the company's most recent Annual Report on Form 10-K and Form 10-Q, as filed with the SEC. Such forward-looking statements speak only as of the date of this release. The company expressly disclaims any obligation to update or revise any forward-looking statements found herein to reflect any changes in company expectations or results or any change in events.
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C. Robert Pedraza
Vice President, Corporate Strategy
Altair Nanotechnologies, Inc.
McCloud Communications, LLC
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