This award enables the Company to direct $750,000 in research funds to refine its revolutionary battery system.

"We are excited about this award. It indicates that the BMDO recognizes the innovation and potential of our battery design," said Zafar A. Munshi, president and chief executive officer of Lithium Power.

"Not only will this contract support our government's defense needs but, once commercialized, this battery will open new horizons to all kinds of electronic devices -- lap tops, wireless communications, smart cards, medical electronics, even electric vehicles such as cars, scooters and bikes."

Phase II of the battery development, which will be administered by the Army's Space and Missile Defense Command, Huntsville, Alabama, began in March 2000. The primary goal is to deliver 25 of the best prototypes in two years.

"In Phase I, we demonstrated cutting edge research with our dry polymer electrolyte and also showed a relentless drive towards commercialization of the technology," said Munshi.

"I believe the drive toward commercialization is a critical factor in the success of BMDO's SBIR Program and its decision to fund any particular research. Because commercialization includes sales back to government programs, we are hopeful that our technology will find applications in both areas -- the private sector and the military."

The Company's solid-state rechargeable lithium polymer electrolyte battery represents a quantum leap beyond anything currently available in the market. The design maximizes energy and power in the construction resulting in fewer inactive components.

The battery is flexible, conforming to almost any shape, and lightweight. In addition, because the electrolytes are solid and dry, the battery is safer and much cheaper to make than lithium ion batteries.

This solid-state battery has energy densities in excess of 300 Watt-hours per kilogram and extremely low self-discharge rates. It can be recharged far in excess of 1,000 times -- more than nickel cadmium batteries, more than nickel metal-hydride batteries, and far more than lithium ion batteries. It operates in a wide range of temperatures (15:C to 150:C) making it safe and suitable for a wide variety of applications.

"Our technology is revolutionary," said Munshi. "It will enable electric vehicles to drive in excess of 300 miles before recharging. We are very grateful to Jeff Bond, Program Manager of BMDO, for recognizing the breadth of our technologies and innovations, and we expect to fulfill our promises in the near future."

Lithium Power develops and manufactures advanced power sources, particularly rechargeable lithium batteries and high-energy capacitors. The Company has research and manufacturing facilities on a 10-acre site a half-hour's drive south of Houston.