Valence Technology Reports Third Quarter and Nine Month Fiscal 2008 Financial Results

  
    
  
  
    
      Valence Technology, Inc. (NASDAQ:VLNC), a leader in Lithium Phosphate 
      energy storage systems today reported financial results for its fiscal 
      third quarter and nine months ended December 31, 2007.
    
    
      Summary results for third quarter fiscal 2008 compared with third 
      quarter fiscal 2007 include:
    
    
      
        Revenue increased to $3.4 million compared with $2.3 million a year 
        ago.
      
      
        Gross margin improved to a negative $0.04 million compared with a 
        negative $0.5 million last year.
      
      
        Operating loss of $4.3 million compared with $4.5 million.
      
      
        Operating expenses of $4.3 million compared with $4.0 million.
      
      
        Net loss available to common shareholders of $5.7 million, or $0.05 
        per share, compared to $6.0 million, or $0.06 per share.
      
    
    
      Summary highlights for nine months fiscal 2008 compared with nine 
      months fiscal 2007 include:
    
    
      
        Revenue increased to $13.0 million for the first nine months compared 
        with $11.9 million last year.
      
      
        Gross margin increased to $1.2 million or 9% of revenue compared with 
        $0.6 million or 5% of revenue last year.
      
      
        Operating expenses declined by $0.5 million, or approximately 4% 
        compared to the same period last year.
      
      
        Operating loss was reduced by $1.0 million to $10.7 million
      
      
        Net loss available to common shareholders improved to $15.0 million, 
        or $0.13 per share, compared with $16.4 million, or $0.17 per share.
      
    
    
      "Our year-to-date performance has improved compared to the same period 
      last year,” said Robert L. Kanode, president 
      and chief executive officer. “And, given our 
      outlook for the current fiscal quarter, we expect to have year-over-year 
      revenue growth. Over 100 corporations and government entities are 
      evaluating our lithium phosphate technology for use in a wide variety of 
      applications. We expect our recently announced Epoch battery system to 
      enable a new generation of demanding applications such as electric 
      vehicles, plug-in hybrids, back-up power, and other applications that 
      require safety, long life, and reliability.”
    
    
      Financial Results
    
    
      
        For the third quarter of fiscal 2008, the company reported total 
        revenue of $3.4 million compared with $2.3 million for the same period 
        last year. While revenues increased by $1.1 million due to additional 
        sales of large format batteries, the overall increase was less than 
        expected in order to implement a component change. Gross margin was 
        negative but improved in the current quarter mainly due to increased 
        sales revenue. The company reported a net loss available to common 
        shareholders of $5.7 million, or $0.05 per share, compared to a net 
        loss of $6.0 million, or $0.06 per share, for the third quarter last 
        year.
      
      
        For the nine month period ended December 31, 2007, revenue was $13.0 
        million compared with $11.9 million for the same period last year. 
        Gross margin improved to 9% due to increased revenue and reductions 
        made to the inventory reserve. Operating expenses declined by 
        approximately $0.5 million or about 4% as part of the company’s 
        continued efforts to control costs. Net loss available to common 
        shareholders improved to $15.0 million, or $0.13 per share compared 
        with $16.4 million, or $0.17 per share for the nine month period ended 
        December 31, 2006.
      
    
    
      Third Quarter Fiscal 2008 Financial Results Conference Call and 
      Webcast
    
    
      The Valence management team will host a conference call and live webcast 
      to discuss the fiscal 2008 third quarter and nine month financial 
      results beginning at 3:00 p.m. CST on Thursday, February 7, 2008. The 
      conference call will be webcast and may be accessed by all interested 
      parties at www.valence.com. 
      To access the webcast, please go to this Web site approximately fifteen 
      minutes prior to the start of the call to register, download, and 
      install any necessary audio software.
    
    
      Those callers within the United States and Canada can dial (888) 
      820-9409 and enter conference identification number 9064825 to 
      participate. Callers outside the United States and Canada can dial (913) 
      312-1417 and enter conference identification number 9064825 to 
      participate.
    
    
      A telephonic replay will be available from 5:00 p.m. CST on February 7, 
      2008 through 5:00 p.m. CST on February 14, 2008. To access the replay, 
      please dial [phone] and enter the following identification number 
      9064825. In addition, a replay of the webcast will be available on the 
      company’s website at www.valence.com.
    
    
      About Valence Technology Inc.
    
    
      Valence Technology developed and markets the industry's first 
      commercially available, safe, large-format family of Lithium Phosphate 
      Rechargeable Batteries. Valence Technology holds an extensive, worldwide 
      portfolio of issued and pending patents relating to its Lithium 
      Phosphate Rechargeable Batteries. The company has facilities in Austin, 
      Texas; Las Vegas, Nevada; Mallusk, Northern Ireland and Suzhou, China. 
      Valence is traded on the NASDAQ Capital Markets under the ticker symbol 
      VLNC and can be found on the internet at http://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 
      Securities and Exchange Commission, including our Report on Form 10-K 
      for the year ended March 31, 2007, 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.
    
    
      {Financial Tables to Follow}
    
    
      
        
           
        
      
      
        
          VALENCE TECHNOLOGY, INC. AND SUBSIDIARIES
        
      
      
        
          CONSOLIDATED BALANCE SHEETS
        
      
      
        
          (in thousands, except share amounts)
        
      
      
        
        
        
           
        
        
        
        
           
        
        
        
      
      
        
        
        
        
        
          December 31, 2007
        
        
        
        
          March 31, 2007
        
      
      
        
          ASSETS
        
        
        
        
        
        
        
        
        
      
      
        
          Current Assets :
        
        
        
        
        
        
        
        
        
      
      
        
          Total Current Assets
        
        
        
        
          $16,461
        
        
        
        
          $15,025
        
      
      
        
          Total Assets
        
        
        
        
          $21,077
        
        
        
        
          $19,200
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Liabilities, Preferred Stock and Stockholders’ 
          Deficit
        
        
        
        
        
        
        
        
        
      
      
        
          Current Liabilities:
        
        
        
        
        
        
        
        
        
      
      
        
          Total Current Liabilities
        
        
        
        
          $7,674
        
        
        
        
          $7,643
        
      
      
        
          Total Liabilities
        
        
        
        
          $81,688
        
        
        
        
          $78,508
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Redeemable Convertible Preferred Stock
        
        
        
        
          $8,610
        
        
        
        
          $8,610
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Total Stockholders’ Deficit
        
        
        
        
          ($69,221)
        
        
        
        
          ($67,918)
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Total Liabilities, Preferred Stock and Stockholders’ 
          Deficit
        
        
        
        
          $21,077
        
        
        
        
          $19,200
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
    
    
      
        
           
        
      
      
        
          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,
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          2007
        
        
        
        
          2006
        
        
        
        
          2007
        
        
        
        
          2006
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Total revenues
        
        
        
        
          $3,378
        
        
        
        
          $2,318
        
        
        
        
          $12,983
        
        
        
        
          $11,862
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Gross margin profit (loss)
        
        
        
        
          ($35)
        
        
        
        
          ($464)
        
        
        
        
          $1,153
        
        
        
        
          $638
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Operating loss
        
        
        
        
          ($4,326)
        
        
        
        
          ($4,458)
        
        
        
        
          ($10,741)
        
        
        
        
          ($11,759)
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Net loss available to common stockholders
        
        
        
        
          ($5,746)
        
        
        
        
          ($5,962)
        
        
        
        
          ($14,998)
        
        
        
        
          ($16,388)
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Net loss per share available to common stockholders
        
        
          ($0.05)
        
        
        
        
          ($0.06)
        
        
        
        
          ($0.13)
        
        
        
        
          ($0.17)