Valence (NASDAQ:VLNC)
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Valence Technology Inc. (Nasdaq:VLNC), provider of
Saphion(R) technology, the industry's first commercially available,
safe, large-format lithium-ion rechargeable battery technology, today
reported results for the quarter ended December 31, 2005.
Highlights for the third quarter of fiscal year 2006 include the
following:
-- Quarterly revenue of $4.8 million, an 89 percent increase over
the same quarter of fiscal year 2005.
-- Improved gross margin as a percentage of sales by 45 percent
over third quarter of fiscal year 2005.
-- Reduced operating expenses by 43 percent from the same quarter
a year ago (excluding special expense and income adjustments).
-- Large-format battery systems sales represented 59 percent of
the sales mix, compared to 10 percent in the same quarter of
fiscal year 2005.
-- Grew the number of customers by 12 percent over second quarter
of fiscal year 2006.
"We're seeing a growing interest in our safe, lithium-ion battery
systems. This is evidenced by the fact that in the first three
quarters of fiscal year 2006, we have exceeded by 28 percent the total
revenue for fiscal year 2005," said Dr. James R. Akridge, president
and chief executive officer of Valence Technology Inc. "Going forward,
the entire company is focused on four strategic priorities: improving
the yield and increasing supply of our Saphion I cathode material;
launching the new lines of U-Charge products announced last month;
aggressively building and diversifying our customer base; and,
reducing costs in all areas of our business."
Financial Results
Valence Technology reported revenue for the third quarter of
fiscal year 2006 of $4.8 million, an increase of 89 percent over third
quarter of fiscal year 2005, which was $2.55 million. The company
reported a net loss available to common stockholders of $8.3 million,
or nine cents per basic and diluted share. This compares to a net loss
available to common stockholders of $6.6 million, or eight cents per
basic and diluted share, in the third quarter of fiscal year 2005, and
a net loss of $8.1 million, or nine cents per basic and diluted share,
in the second quarter of fiscal year 2006.
New Executive for Asia/Pacific Operations
ChunTai Guo joined Valence Technology two months ago as a vice
president and, today, the company announced his promotion to president
of Asia/Pacific Operations. A battery industry veteran, Dr. Guo has
expertise in fundamental lithium-ion chemistry, processes,
applications and manufacturing. He also brings experience in general
management, cost control systems, supply chain management, systems
development and quality control.
Dr. Guo most recently served as general manager and chief
technology officer at TCL Hyperpower Battery Inc., the second largest
laminate lithium-ion battery company in China. Prior to that, he was a
technology founder and the chief scientist at Shubila Battery
(subsequently Etion) in Malaysia, where he was instrumental in the
company's successful commercialization of polymer lithium-ion battery
technology.
Reporting to CEO Dr. Akridge, Dr. Guo's responsibilities at
Valence Technology include oversight of manufacturing and quality
control operations, implementing production cost-reduction measures,
management of manufacturing suppliers, and pursuing strategic business
opportunities in the Asia/Pacific region.
Conference Call
The company will discuss its quarterly results during a conference
call today at 5:00 P.M. EST (2:00 P.M. PST). The broadcast will be
hosted on the company's web site: www.valence.com. Participants should
allow approximately 15 minutes prior to the call's start time to visit
the site and download any streaming media software needed to listen to
the Internet broadcast. The company will make an online archive of the
broadcast and it will remain available on the Valence Technology web
site for 30 days following the live call.
About Valence Technology Inc.
Valence Technology develops and markets intelligent battery
systems using its Saphion(R) technology, the industry's first
commercially available, safe, large-format Lithium-ion rechargeable
battery technology. Valence Technology holds an extensive, worldwide
portfolio of issued and pending patents relating to its Saphion
technology and lithium-ion rechargeable batteries. The company has
facilities in Austin, Texas, Las Vegas, Nevada, and Suzhou and
Shanghai, China. Valence Technology is traded on the Nasdaq Capital
Market under the symbol VLNC and can be found on the Internet at
www.valence.com.
Safe Harbor Statement
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
including our statements that we are positioned to realize better
execution, improve gross margins, continue to reduce production costs
and expenses, realize a strong year in both customer orders and
revenue and our financial guidance. Actual results may vary
substantially from these forward-looking statements as a result of a
variety of factors. Among the important factors that could cause
actual results to differ are: the impact of our limited financial
resources on our ability to execute on our business plan and the need
to raise additional debt or equity financing to execute on that plan;
our uninterrupted history of quarterly losses; our ability to service
our debt, which is substantial in relationship to our assets and
equity values; the pledge of all of our assets as security for our
existing indebtedness; the rate of customer acceptance and sales of
our products; the continuance of our relationship with a few existing
customers, which account for a substantial portion of our current and
expected sales in the upcoming year; the level and pace of expansion
of our manufacturing capabilities; the level of direct costs and our
ability to grow revenues to a level necessary to achieve profitable
operating margins in order to achieve break-even cash flow; the level
of our selling, general and administrative costs; any impairment in
the carrying value of our intangible or other assets; our execution on
our business strategy of moving our operations to Asia and our ability
to achieve our intended strategic and operating goals; the effects of
competition; and general economic conditions. These and other risk
factors that could affect actual results are discussed in our periodic
reports filed with the SEC, including our Annual Report on Form 10-K
for the year ended March 31, 2005 and our Quarterly Report on Form
10-Q for the quarter ended December 31, 2005, and the reader is
directed to these statements for a further discussion of important
factors that could cause actual results to differ materially from
those in the forward-looking statements.
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VALENCE TECHNOLOGY INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
December 31, March 31,
2005 2005
------------ ------------
ASSETS
Total current assets $13,296 $7,448
------------ ------------
Total assets $16,735 $10,231
============ ============
LIABILITIES, PREFERRED STOCK
AND STOCKHOLDERS' DEFICIT
Current liabilities:
Total current liabilities $9,257 $9,099
------------ ------------
Total liabilities 74,837 56,291
------------ ------------
Redeemable convertible preferred stock 8,610 8,582
------------ ------------
Total stockholders' deficit (66,712) (54,642)
------------ ------------
Total liabilities, preferred stock
and stockholders' deficit $16,735 $10,231
============ ============
VALENCE TECHNOLOGY INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
December 31, December 31,
-------------------------------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------
Total revenues $4,819 $2,547 $13,742 $8,298
Operating loss (6,875) (5,474) (20,833) (19,421)
Net loss available to
common stockholders $(8,311) $(6,609) $(24,562) $(22,998)
========== ========== ========== ==========
Net loss per share
available to common
stockholders $(0.09) $(0.08) $(0.28) $(0.29)
========== ========== ========== ==========
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