Question and Answer Session with Next-Battery CEO and Founder Benton Wilcoxon

What experience do you have in the battery technology sector and what are is your scientific background?

I and the whole scientific team have developed many technologies as well as all the associated processes for commercial production and marketing them.

More than 20 years ago, one of the companies that I ran developed several battery-based technologies focused in almost exactly the same area that we are working in today. These , included a supercapacitor based upon intercalated carbon (the same substance that most sophisticated lithium ion anodes use today) and also lithium batteries for very small applications such as watch batteries, calculator batteries and keyfobs .

At that time, the company decided to put those technologies on the shelf, since the commercial market was not sufficiently developed but I haven’t forgotten what we did and I have brought all this work to Next-Battery. In fact, you could say that our current project at Next-Battery has been twenty years in the making.

Myself and the team are very familiar with battery and capacitor laboratories and all the testing equipment and procedures. We have also had discussions with some of the small companies that survived and are still in those technologies today.

Today our team is applying a significantly different approach, using technologies evolving from nano and micro structuring materials and using various metal oxides for many different product applications. In simple terms we are making and testing novel electrodes. We have the expertise and the equipment to perform these technology processes, and therefore we are very confident that our new electrodes for lithium-battery applications will perform in a far superior manner when compared to the traditional methods of commercial production today.

Many commentators suggest that when small companies compete with the big boys, the big boys always win. They have more money and bigger scientific teams so small companies are always several steps behind. Why will it be any different for Next Battery?

We don’t see it this way. In my experience, most of the time, big companies wait to see a new technology de-risked and then buy it, even though it always means they pay more. Money is not the primary issue for them as they have access to lots of it and are prepared to spend on a product that benefits them. Where they fall down is that their scientists cannot afford the politics of risk within the big company environment. What they tend to do is the same as everyone else, they play it safe. If they go in a different direction and get it wrong then the heads of departments generally lose their well paid jobs. They are more about minimising risk than maximising opportunity.

It happens in all markets in all sectors – a small company comes up with a breakthrough and a big company buys them in part because they do not want them to grow up to be a serious rival. The big car manufacturers have already allowed Tesla to come out of nowhere and become a big player by totally innovating a car market that was dominated by global giants worth hundreds of billions. When Elon Musk first came up with the idea of taking on the big boys by innovating in a totally different way many people said it could not be done but he did it.

How do we know that this technology is the real deal and not another battery bandwagon play especially with your sensitivities around employees and who they are?

Firstly, we believe Hipo have made a good investment and we are grateful for their support. We have a regular dialogue with them, like any dialogue a company should have with a large shareholder, and they support our development initiatives.

I don’t believe that a comparison with a company that made an investment in non-existant technology is anyway justified. I have been working with various institutes of the Academy of Sciences of Ukraine since late 1991 and have successfully taken several technologies to market from there, as well as other technologies from the United States. These include the commercialisation of the strongest aluminium scandium alloys which are now used in defence aerospace and airbus and also the development of the Aluminum Condcuctor Composite Core for the most environmentally friendly high voltage transmission lines – sold globally including Germany, the UK, Australia and China.

All these technologies were the first commercialisation of each respective technology; each of them are in widespread use worldwide even today and there is documentation available to show this. There are several patents filed with the US patent office and many international jurisdictions for those very technologies that were filed by employees of the companies I ran. I have a decades long and eminently traceable track record of working in this sector and I have never been involved in anything but serious technologies, many of which were successfully commercialized.

Regarding the secrecy around Next-Battery employees; truthfully, investors would not know any of the scientists if we did publish their names and even if they did they could not evaluate the validity of the technology so, frustrating as it may be, there is no good reason to publish them. However, there are many good reasons not to publish them. When working on cutting-edge science there is rampant theft of technology and there is certainly less loyalty than was more common in the past, and therefore, it is prudent to finalise the intellectual property protection before entering into the public arena.

I speak from bitter experience. In one of my previous companies we had a number of consultants working with us who quite blatantly stole our intellectual property, poached our staff and set up in competition to us using our own technologies. We took action against them of course, but they spent a lot of money on publicly attacking the company, and me personally; accusing our patents of being false and all sorts of other nonsense, but it caused us huge expense and perception problems. Even though the case was cut and dried, it still took 12 years for the courts to settle the case in our favour and by that time the damage had already been done and now it is others who are reaping the benefits of the technology I produced and brought to market.

Today, the traditional concept of patent protection is sorely outdated and in many cases are useless, except to provide the illusion to investors that they are protected and to support many attorneys. I have lived through this scenario once and do not wish to do it again. What I want this time round is for Next-Battery to commercialise our technology for the benefit of ourselves and our investors and not to give any outside parties the chance to ruin this opportunity. It is for this reason that we have chosen to keep the names of the scientific team secret. I realise that this may frustrate some people but it is the right thing to do. We will endeavour to keep HIPO investors up to date as much as possible with photographs and videos of our progress as we make it.

You were quoted in a news article as being ““100 per cent confident it (the battery) will work” but how can you be 100% confident when it is a product that was also been described as being a “Desktop experiment”, “a concept, not a tested technology” and “hasn’t been tested yet on a cathode or a complete battery”?

The description “desktop experiment” is a slightly misleading description of where we are at in terms of development as it implies that the Next-Battery prototype is merely a theoretical concept.

But to answer the question, yes, I am 100% confident that the battery will work because a novel electrode for a super-capacitor has been made and proven. It is not a concept, it already works, so it is only the art of re-engineering for a lithium-ion battery cathode that is still to be done, using well known battery chemistries with the metal oxides necessary for a lithium-ion battery.

The question is not will it work – we know that it will work. The question is simply how much extra energy will this contain compared to existing commercial battery technologies?

It is not a desktop experiment or a concept – it long ago moved beyond that using very sophisticated techniques with special equipment. It is working technology that has just not yet been put together in a completed cathode or prototype battery – and we plan to have the first cathode to test before the end of 2018.

Should we have cause for concern without any patents filed ?

Patents are not the key, novel inventions that can be economically put into commercial production in a timely manner with an excellent intellectual property strategy are what is the most important item. Patents give one an excuse to litigate, but do not “stop” anyone else from copying aspects of the technology. Certainly, it is clear that China among others have little respect for patents, and copy almost anything possible and rush it to mass market.

A, lot of time and money can be spent on patents and it can slow a good development plan down. Whilst we might seem like a bunch of scientists, we are also pragmatic business people that want to get our product to market in what is a very fast-moving and quickly evolving sector.

We have working technology that (as far as we are aware) is significantly different than any other patent disclosure or announcement. Our technology is working and just needs to be put together in a prototype battery.

If the tech is so good then why is it only HIPO who bought into it? Why were BMW or some other global giant not interested? Did you approach them?

It is still too early to have any discussions with companies such as BMW, as they want to see a working packaged model even if very small. As I said before, big companies buy new technology that is “proven” at a premium price, even if they could have bought for much less earlier. They have a different business model.

BMW is in the business of designing, engineering, assembling and marketing cars, not inventing batteries. Look at mining exploration, typically done by small entities and then when “proven” sell to the majors at a premium. It is the same with technology.

Big battery companies have their own approach and their R&D is generally about improving their existing products, not inventing a completely different approach to things that they already feel are “done” and being successfully marketed.

But put simply, we were introduced to Hipo in January of this year and we have had an ongoing dialogue with them. They are building out their portfolio of investments in the battery minerals and technology sector and they seized the opportunity. I believe they have made a good investment and we will demonstrate this for them as we meet all our milestones.

You are quoted in the news article as only having started this project at Christmas 2017 – what gives you confidence that you can at least double the performance of the Tesla 2170 battery in 12 – 18 months?

Our team has been working with this technology for over 10 years and at one time had over a hundred scientists and technicians working on the technology, including the supercapacitor electrode. So it is not just a few months old. We have decided to form a new entity and commericalize the technology in a lithium-ion battery and are proceeding to that with the new company.

What are the milestones you expect to be able to achieve between now and the production of the prototype? How do investors measure whether progress is being made or not?

We at Next-Battery are focusing on completing the electrode structure for the cathode and the anode and will then be able to test the novel lithium-ion battery. We will be disclosing our progress along the way and believe Hipo as a listed company will be able to obtain tangible benefits as we progress towards the full working prototype. The novel lithium-ion battery prototype is anticipated to be demonstrated within the next 4-6 months.

Even after the prototype has been developed what makes you think that battery manufacturers will use your products instead of their own? Will it not increase their manufacturing costs if they use your new technologies? Would they even be interested in using your technology?

Manufacturers, or at least some of them, will want it because it will improve the competitive nature of their batteries and should cost approximately the same to produce as existing batteries – simple business. It’s a better product at a more economical value. Much simpler to understand than a previous technology I commercialized (ACCC conductors), when one had to demonstrate the economic and environmental advantages using very sophisticated custom computer programs to justify the initial higher cost to achieve dramatic savings after a reasonable period of time. In the case of the battery, the factors are much more straightforward since the key is to have higher specific energy per given weight in a specific device (mobile phone or electric vehicle), and demonstrate it greater run time, better charge times, reasonable life cycle, and safety, at a reasonable cost.

I should think that every car manufacturer will want a battery than enables their car to go 600 miles on a single charge and every phone manufacturer will want a battery that can last twice as long as it does today.

If the technology works how much more money will need to be raised to fund the capex of building your own manufacturing capabilities?

Setting up our own manufacturing of completed batteries and large battery packs in quantity would cost hundreds of millions and it could be difficult to compete with the current and planned gigafactories. This is precisely why we would not be going down this route.

Our technology production techniques could fit into the existing processes used by battery manufacturing factories with minimal expenditure on their behalf. We will license the technology to them and possibly we would produce our special electrodes materials that they would need to introduce into their battery production lines, which may allow battery manufacturers to implement our technology even faster at a very reasonable cost. This approach makes more commercial sense to us, and it is this approach that in fact appealed to Hipo.

What will the value of Next-Battery be if the prototype technology is a success? How much will car manufacturers pay to buy the company?

The lithium-ion battery market is forecast to be worth $300 billion per annum in the next 20 years. If we could get 1% of this the company would be worth a lot of money – hundreds of millions, billions? If someone wanted to buy it, then they would have a very big cheque. It is interesting to see the size of investments which various car manufacturers and battery companies are making into new prospective battery technologies, which total several hundred million dollars.

But we don’t want to get ahead of ourselves. We are just focused on getting on with our work and hitting milestones, and if we do, the value will come. We are confident of delivering some solid news flow on developments between now and the end of 2018.