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Maxwell is revolutionizing electrical systems designs in automobiles, digital cameras and other electronic devices with their ultracapacitor technology

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Power Technology
Computer Hardware

Maxwell Technologies, Inc.

8888 Balboa Avenue
San Diego, CA 92123
Phone: 858-503-5171

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Carlton J. Eibl
President and
Chief Executive Officer

Interview conducted by:
Walter Banks

May 2002

Bio of CEO,

President & Chief Executive Officer

Carl Eibl joined Maxwell as president and chief executive officer in December 1999, after serving as an independent member of the company’s board of directors since 1998.   From February 1999 until he joined Maxwell, he was president and a director of Stratagene Corporation, a privately held developer and supplier of laboratory instruments and biological tools to the life science industry.  Previously, he was president and chief executive of Mycogen Corporation, a publicly held agricultural biotechnology company that was acquired by Dow Chemical in November 1998.

Company Profile:
Maxwell Technologies, Inc. manufactures and markets high-reliability power and computing components and systems and automated test instruments.

Maxwell Technology Components Group
Ultracapacitor Product:
Maxwell Technologies' PowerCache™ ultracapacitor products are the world's leading high-performance production ultracapacitors. As compared to batteries, PowerCache cells deliver up to 10 times the power, last up to 10 times as long, operate more reliably in high and low-temperature conditions, require far less maintenance and reduce environmental issues associated with battery disposal. They have an extremely high electrical energy storage capacity and the ability to deliver bursts of high power and recharge rapidly from any energy source over hundreds of thousands of cycles.

Their postage stamp-size small cell ultracapacitors extend battery life and enhance the performance and functionality of hand-held electronic devices, remote transmitting devices and toys. Small cell ultracapacitors are UL Recognized Components.

Large cells measuring 2” x 2” x 6” are linked together to form power packs of up to 500 cells to power initial acceleration, operate electrical subsystems and recapture energy from braking for cleaner, more fuel-efficient hybrid electric/internal combustion buses, trucks and automobiles.

Microelectronics Products:
They design and manufacture radiation-shielded integrated circuits, power modules and single board computers for the space and military markets. Their proprietary shielding technology allows their original equipment manufacturer customers to use powerful, low-cost, off-the-shelf components, protected with the level of radiation shielding required for the orbit or environment in which satellites or spacecraft are to be deployed.

Their Xray-Pak™ radiation mitigation technology is used to shield integrated circuits that process and store data in military satellites from the radiation effects of nuclear blasts.
Xray-Pak integrates flexible, lightweight, metal packaging with Maxwell's proprietary Rad-Pak® shielding technology to protect commercial microelectronic components, such as monolithic and multi-chip data converters, memory and logic devices, from Xray emissions produced by the detonation of nuclear weapons.

Instrument Products:
Maxwell Technologies’ Instrument Products develops, manufacturers, and supports Automated Accelerated Reliability Test Systems (AARTS) for RF and photonic compound semiconductor devices. This is an outgrowth of the book they helped to write on GaAs reliability assurance guidelines. AARTS will control the temperature, dc biases and RF excitation of each of 32 individual devices under test (DUT). The system continuously monitors the parts, warning users of changes and archiving data for use in determining parts life.

Instrument Products seized on expertise in instruments, DSP and microwave technologies to build high performance low profile custom subsystems for the OEM test instrument industry. For example vector network analyzers, programmable semiconductor power supplies, high power RF signal generators, RF multichannel matrix switch, and RF distribution units.

I-Bus/Phoenix Group:
Mission Critical High Reliability Platforms.

I-Bus/Phoenix manufactures fully integrated high reliability computing platforms including Compact PCI technology, designed for a range of mission-critical applications. In addition, they provide comprehensive power protection systems. They offer full OEM product development, approvals management, testing and configuration, and total system integration to meet the specific requirements of their customers throughout the world. Systems include fully configured 1U, 2U, 4U and 6U ISA/PCI solutions.
Their systems allow major OEMs to address current applications in the certainty that their scalability and flexibility will accommodate the demands of future technologies. From applications ranging from Internet servers and broadcast delivery systems, to computer telephony integration servers and industrial control systems, I-Bus/Phoenix is ideally placed to provide the expertise, continuity of supply, third party alliances and global presence demanded by their OEM customers.

CEOCFOinterviews: Mr. Eibl, please give us a brief history of Maxwell Technologies.

Mr. Eibl: “Maxwell is a 40-year-old company located in San Diego. The heritage of the company was as an R&D ‘think-tank’ for the U.S. military that developed a lot of power and computing technology. Three years ago, we started to take the technology out of the military side and build commercial businesses around the power and computing technology. What we have done in the last two years is build two new companies around  technology that came from decades of research for military agencies. We sold our defense business to finance the re-build of the new Maxwell, and as we stand right now; we have two factories here in San Diego and one in the United Kingdom; we have operations here in the U.S. and throughout Europe. At the end of 2001, we began bringing these new technology sets in the form of an array of new products into the market place.”

CEOCFOinterviews: What are your two core businesses?

Mr. Eibl: “The two core businesses are a components group which make the ultracapacitors and other electronic components, and another group which is a systems integration group that builds computing platforms and power systems to go into broader networks.”

CEOCFOinterviews: What are the names of each group?

Mr. Eibl: “One group is Maxwell Technologies Components and the other is I-Bus/Phoenix, which is a combination of a computing company and a power systems company two companies that we put together to leverage our technology.

CEOCFOinterviews: What products are you offering at Maxwell?

Mr. Eibl: “Our Maxwell Technology Components Group has two product lines, one is a microelectronics product line that goes into commercial and military satellites and other military electronics. We make components, power modules, integrated circuits and single board computers that are shielded from radiation encountered in space or potential nuclear weapons radiation effects that battlefield vehicles, aircraft and naval vessels must be able to withstand. We deliver highly reliable computing and power modules that are shielded from radiation.

The other main component products, which are really one of the hallmarks of Maxwell, are our
ultracapacitors. These are solid-state devices ranging from the size of a thumbnail up to the size of a thermos, that store electrons much like a computer stores memory and balances memory speed. Stored electrical energy can be harvested from ultracapacitors in very rapid bursts or gradually, depending on the application. We have begun to bring the solid-state ultracapacitors into a very broad range of end markets. They have been designed into digital cameras; they extend the life of alkaline batteries in cameras by about 3X. In addition, we have been designed into certain applications for hybrid internal combustion electric vehicles, and electrical subsystems on vehicles where rapid bursts mode of high power are required.”

CEOCFOinterviews: Is there a global market for the ultracapacitor technology?

Mr. Eibl: Yes, ultracapacitors are being designed into buses, truck and autos and consumer and industrial electronic devices by OEMs in North America, Asia and Europe. The production ramp has just begun; we are now shipping the initial quantities into those global markets. It provides improved functionality for everything from a hand-held device to something as large as a vehicle.

CEOCFOinterviews: How are you bringing your product to the marketplace?

Mr. Eibl: “Our products are integrated into larger devices or systems made by OEMs.”

CEOCFOinterviews: What products do you market with the I-Bus/Phoenix Group?

Mr. Eibl: “Our I-Bus/Phoenix power and computing systems group makes highly reliable computing systems for the telecommunications, broadcast computer telephony, and industrial markets. We design and build very high-end servers for applications that require near-zero downtime reliability. We commercialize those systems in the US, Europe and Asia directly to OEMs.

”On the power side of the business, we make power conditioning and power distribution units for systems such as telecommunication base stations and medical imaging equipment that require very clean, consistent, un-interrupted power.”

CEOCFOinterviews: Which presents the biggest growth area?

Mr. Eibl: “The part of our platform that has explosive growth potential is the ultracapacitor technology; these are very elegant devices that store electrical energy and then deliver that electricity in rapid bursts or gradually, depending on the application. Nothing invented previously offers this kind of functionality in a solid-state device.

“It is analogous to memory cash in your computer; imagine if you had a computer with no memory and someone came by with a device in hand and said  “here” you can now balance high speed and low speed memory operating inside your P.C., and that device never existed before. We are bringing a device that never existed before, which does that with electrical energy to applications that can benefit from these characteristics and the type of functionality that ultracapacitors now permit. Moreover, it is really just beginning. Ultracapacitor technology is changing ways of thinking about designing electrical systems, whether it’s in a digital camera or power steering in an automobile; this device is providing new engineering techniques to address a variety of these.”

CEOCFOinterviews: Do you have competitors or are you the lone wolf?

Mr. Eibl: “As it stands now, we have a technological leadership position; we are identified globally as being the leader in ultracapacitor technology.  The other company that is in this marketplace is Panasonic, and we have said before that we need Panasonic to be successful. When we talk about providing these types of components to the automotive industry or the consumer electronic industry; these industries do not deal with one supplier; they need to have a second source.

”What is very encouraging is that beyond Maxwell and Panasonic there is nobody even close to making ultracapacitor technology a commercial reality. There are others trying to enter the game, but it is very late and they are still at the rudimentary R&D stage. It took Maxwell ten years and very heavy investment by government agencies to develop our technology. For someone to start now and try to get into the game will be too little and way too late.”

CEOCFOinterviews: Was your product pipeline built through acquisitions or R&D?

Mr. Eibl: “It was all built through R&D. We took raw technology that existed in the defense business. In the last two-and-a-half years, we have been developing commercial products with commercial R&D groups to bring this technology into commercial markets. In the ‘old’ defense-oriented Maxwell, you had technology developed but you didn’t have it designed in products that could be sold into the commercial market in a robust way.”

CEOCFOinterviews: How strong is your patent protection?

Mr. Eibl: “Our products are a very heavily intellectually property protected.”

CEOCFOinterviews: As it stands now, where are you in the marketplace?

Mr. Eibl: “We have been designed into subsystems that will go into hybrid internal combustion/electric vehicles. These vehicles recapture braking energy by converting kinetic energy from slowing the vehicle into electric energy that is stored in a bank of ultracapacitors. That energy can be harvested to run on-board electronics or to be put back into the drive train to assist acceleration. These are systems that every automotive company has announced that they will be bringing forward in the next three years into their high-end SUV, pick-up lines or vans, where the pressure for improved fuel economy and emissions profiles is quite strong.

Already Toyota Motor Corporation (NYSE: TM) and American Honda Motor Co., Inc., are bringing those types of hybrid vehicles to the marketplace, and they have said that future models will employ
ultracapacitors for energy storage. There is an announcement already from General Motors (NYSE: GM), that the Sierra pickup line and the Chevy Suburban for the 2005 model year will have these types of systems available in these models. That means that production of the vehicles will begin in 2004, with delivery of production runs of ultracapacitors the middle to the second half of 2003. Daimler Chrysler (NYSE: DCX) is doing the same, Volkswagen has announced their program and Ford Motor Company (NYSE: F) is evaluating whether they are going to go with an exotic battery technology or ultracapacitors.  In addition to electrically assisted power trains, there is another wave of new technology coming into the vehicle, as more and more of the onboard electronics and internal workings of the vehicle are being converted to all-electric instead hydraulic or mechanical systems, and that also requires improved energy storage such as ultracapacitors can provide.”

CEOCFOinterviews: What other areas are you working in?

Mr. Eibl: “On the military side, we have been working with Oshkosh Truck Corporation (NASD: OTRKB). Oshkosh is one of the major suppliers of vehicles such as trucks and armored personnel carriers to the military, and they are bringing ultracapacitor technology into electrical systems for military vehicles to make them more reliable. They have already begun to bring certain drive train designs and certain electrical sub-systems into that market, using our ultracapacitor technology.” 

CEOCFOinterviews: Have you been designed into any platforms?

Mr. Eibl: “We have been acknowledged and designed into platforms that General Motors has. That is a product of not only GM evaluating our ultracapacitor technology and components, but their purchasing and manufacturing groups coming and looking at our factory to assure themselves that ‘these guys can scale.’  That is ‘where the rubber meets the road’ -- the ability to produce the component volume. We have designed the component so that we can assemble it with slightly modified equipment that originally was designed to wind batteries.”

CEOCFOinterviews: When can we expect to see a ramp on ultracapacitors?

Mr. Eibl: “I think what people are going to see is the beginning of the ramp on ultracapacitors here in 2002; there are other industrial and consumer electronic applications that have begun already. It will be incremental but there will be quarter over quarter improvement. I think 2003 will be the beginning of a substantial growth ramp; clearly, with the type of opportunities just in the transportation market, we will anticipate having very rapid growth as we get to the back-end of 2003.”

CEOCFOinterviews: Can you give us a picture of your revenues?

Mr. Eibl: “Last year, 2001, Maxwell’s revenues were approximately 68 million; you had those revenues balanced pretty much on an assemblage of some build-to-print legacy products, plus a sprinkling of new, proprietary technology-driven products. We started in Q4, and continued in Q1, moving proprietary products in and moving out of some of the lower margin build-to-print products.

”We have said that now, in Q2, we will begin to grow. That growth will not be explosive, but it will be positive and meaningful. We expect to start cutting the stairs. In 2002, we are in the initial stages of design, production volumes and continued sampling of new products into the marketplace. All that is going on now is very much setting up 2003 and beyond for an accelerated growth ramp.”

CEOCFOinterviews: Do you have the cash and/or credit to go forward?

Mr. Eibl: “One of the things that we have done while focusing on these two platforms is improve non-core businesses in Maxwell and sell them at attractive values. At the end of the March 2002 quarter we had about $21 million of cash on the balance sheet; given the model that we have, and the expected ramping in this challenging environment that the marketplace presents right now; we think the cash is adequate to go forward.”

CEOCFOinterviews: What is your management approach for each group?

Mr. Eibl: “Each division has a management team that focuses on the components and systems level of products. The business model and the way you reach the markets at a component level vs. a systems level, is quite different. I am very involved with both teams, making sure that the strategy, product introduction time lines and the focus on the marketing and sales, is happening within a time frame and with the sense of urgency that is needed. In re-inventing a company and bringing new products out, it is about half brains and half brawn; you really have to punch into those markets and you have a time frame to do that. We are about two quarters into the process of bringing these products to the marketplace. It requires a lot of focus and attention internally to make sure that everything is being done competently.”

CEOCFOinterviews: Where would you like to see the company in a year or so from now?

Mr. Eibl: “I think that the company’s internal competencies are gong to coincide with macro forces that are driving a lot of need for power technology. The whole power technology arena is something that has not had much focus in terms of product development or attention from the financial markets. When you understand the power requirements and the need for innovative power technologies, I think this is going to be a sector that is going to draw a lot of attention because need for improved functionality is so ripe to bring to the marketplace. For example, in your car, you have a hydraulic system where you are turning your wheels with a mechanical assembly whose operation consumes fuel.

”There is absolutely no reason why you shouldn’t have the power steering on your car be totally governed by an electrical system, to have a ‘drive by wire’ electrical system that moves your wheels. If you move to an electrical system, you not only save fuel, but you also have a more responsive, dynamic and serviceable system. However, new steering technology hasn’t made it into large-scale production cars because the power technology to support it didn’t exist. What you are seeing now, out of Maxwell and other companies is the ability to put together different sub-systems to provide a very different type of functionality that comes from the ability to bring power technology together to deliver a solution.”

CEOCFOinterviews: So you think the automobile market is your future.

Mr. Eibl: “I would say that is one of the very strong legs.”

CEOCFOinterviews: Could the ultracapacitors technology lower the cost of manufacturing an automobile?

Mr. Eibl: “It could, because you don’t have to size the motor to drive all the electronics on the car; you can have a separate electrical system that uses the battery and recaptures energy from braking to provide that system with electric power to run a lot of the subsystems on the vehicle. You don’t have to have that steep drain on the automobile that takes horsepower away from moving the car to do these other things. You can size the engine and figure the engine in a different way now that you can power the complete electronic needs of the car in a different way.”

CEOCFOinterviews: Are systems built around your ultracapacitor technology very durable?

Mr. Eibl: “The automakers believe that the durability of all-electric systems will be better that what exists now. Mechanical and hydraulic systems degrade very fast. Systems based on ultracapacitors technology allow for greater longevity, better reliability, and the ability to easily swap out components if they do go bad.”

CEOCFOinterviews: What would you like to say to current shareholders and future investors?

Mr. Eibl: “I think in this marketplace, people are looking for the beginning of the progress in terms of revenues; I think that in this market place, people are moving away from story lines and looking for real financial performance. People want to see the beginning of confirmation that there is integrity in the story by seeing it beginning to be reflected in revenue growth. I suggest that investors watch Maxwell over the next few quarters and watch the beginning of the growth and understand the size of the markets that we are targeting.  They will be able to extrapolate and see where this technology and the company are going. Just like any company has to start with getting its products introduced; a company has to start gaining the confidence of the investment community by beginning to show growth on the revenue line. For Maxwell, it will begin right here in Q-2 2002.”


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