Valence Technology Inc. (NASDAQ:VLNC), providers of Saphion� energy
storage systems, the industry�s first commercially available, safe,
large-format lithium-ion phosphate rechargeable batteries, today
reported results for the three-month period ending September 30,
2006. Second Quarter Highlights: Achieved record quarterly revenue
of $6.4 million. Reported a record 16.9 percent gross margin.
Reduced operating expenses by 13.4 compared to second quarter of
fiscal 2006. Decreased operating cash flow by 32.8 percent
year-over-year. Reduced net loss available to common stockholders
by 40.8 percent compared to second quarter of fiscal 2006. �I am
pleased with our cost reduction programs and enhanced manufacturing
processes, as well as the momentum we are experiencing for our
large-format Saphion� batteries,� said Dr. James R. Akridge,
president and chief executive officer of Valence Technology Inc.
�We will remain focused on cost control, quality processes and
products, improved productivity and higher revenue, while
diligently working to bring the Company to profitability.�
Financial Results Valence Technology reported record revenue for
the second quarter of fiscal year 2007 of $6.4 million, an increase
of 15.5 percent over the second quarter of fiscal 2006, and an
increase of 101.3 percent over first quarter of fiscal 2007. The
substantial increase in revenue is a result of the small-format
N-Charge system orders that were scheduled to ship in the first
quarter but were postponed due to the Company�s UL recertification
process. Large-format systems represented 69.0 percent of total
revenue for the second quarter. The company reported a net loss
available to common stockholders of $4.8 million, or $0.05 per
basic and diluted share. This compares to a net loss available to
common stockholders of $8.1 million, or $0.09 per basic and diluted
share in the second quarter of fiscal 2006, and a net loss of $5.7
million, or $0.06 per basic and diluted share in the first quarter
of fiscal 2007. Second Quarter Financial Results Conference Call
and Webcast The Valence management team will host a conference call
and live webcast to discuss the second quarter of fiscal year 2007
financial results beginning at 3:00 p.m. CST on Wednesday, November
8, 2006. To participate in the conference call by telephone, please
call 800-289-0572 at approximately 2:45 p.m. CST. Please provide
the following ID Number: 4336853. A telephonic replay will be
available from 5:00 p.m. CST on Wednesday, November 8, 2006,
through 11:59 p.m. CST on Tuesday, November 14, 2006. To access the
replay, please call 888-203-1112 and enter the following ID Number:
4336853. About Valence Technology Inc. Valence Technology develops
and markets intelligent battery systems using its Saphion�
technology, the industry's first commercially available, safe,
large-format Lithium-ion phosphate rechargeable battery technology.
Valence Technology holds an extensive, worldwide portfolio of
issued and pending patents relating to its Saphion technology and
lithium-ion phosphate rechargeable batteries. The company has
facilities in Austin, Texas, Las Vegas, Nevada, Mallusk, Ireland
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 Securities and Exchange
Commission, including our Report on Form 10-K for the year ended
March 31, 2006, 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. VALENCE TECHNOLOGY, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (in
thousands, except per share amounts) � Three Months Ended Six
Months Ended September 30, September 30, 2006� 2005� 2006� 2005� �
� Total revenues $ 6,376� $ 5,518� $ 9,544� $ 8,923� � Gross margin
profit (loss) 1,079� (1,826) 1,101� (3,748) � Operating loss
(3,142) (6,698) (7,302) (13,958) � Net loss available to common
stockholders ($4,768) ($8,053) ($10,425) ($16,250) � Net loss per
share available to common stockholders $ (0.05) $ (0.09) $ (0.11) $
(0.18) VALENCE TECHNOLOGY, INC. AND SUBSIDIARIES CONSOLIDATED
BALANCE SHEETS (in thousands, except share amounts) � � September
30, 2006 March 31, 2006 Assets Current assets: Total current assets
$ 15,049� $ 8,292� � � Total assets 18,724� 11,632� � Liabilities
and Stockholders' Deficit Current liabilities: � Total current
liabilities 6,057� 12,542� � � Total liabilities 74,834� 79,234�
Commitments and contingencies -� -� Redeemable convertible
preferred stock 8,610� 8,610� � � Total stockholders� deficit
(64,720) (76,212) � � Total liabilities, preferred stock and
stockholders� deficit $ 18,724� $ 11,632� Valence Technology Inc.
(NASDAQ:VLNC), providers of Saphion(R) energy storage systems, the
industry's first commercially available, safe, large-format
lithium-ion phosphate rechargeable batteries, today reported
results for the three-month period ending September 30, 2006.
Second Quarter Highlights: -- Achieved record quarterly revenue of
$6.4 million. -- Reported a record 16.9 percent gross margin. --
Reduced operating expenses by 13.4 compared to second quarter of
fiscal 2006. -- Decreased operating cash flow by 32.8 percent
year-over-year. -- Reduced net loss available to common
stockholders by 40.8 percent compared to second quarter of fiscal
2006. "I am pleased with our cost reduction programs and enhanced
manufacturing processes, as well as the momentum we are
experiencing for our large-format Saphion(R) batteries," said Dr.
James R. Akridge, president and chief executive officer of Valence
Technology Inc. "We will remain focused on cost control, quality
processes and products, improved productivity and higher revenue,
while diligently working to bring the Company to profitability."
Financial Results Valence Technology reported record revenue for
the second quarter of fiscal year 2007 of $6.4 million, an increase
of 15.5 percent over the second quarter of fiscal 2006, and an
increase of 101.3 percent over first quarter of fiscal 2007. The
substantial increase in revenue is a result of the small-format
N-Charge system orders that were scheduled to ship in the first
quarter but were postponed due to the Company's UL recertification
process. Large-format systems represented 69.0 percent of total
revenue for the second quarter. The company reported a net loss
available to common stockholders of $4.8 million, or $0.05 per
basic and diluted share. This compares to a net loss available to
common stockholders of $8.1 million, or $0.09 per basic and diluted
share in the second quarter of fiscal 2006, and a net loss of $5.7
million, or $0.06 per basic and diluted share in the first quarter
of fiscal 2007. Second Quarter Financial Results Conference Call
and Webcast The Valence management team will host a conference call
and live webcast to discuss the second quarter of fiscal year 2007
financial results beginning at 3:00 p.m. CST on Wednesday, November
8, 2006. To participate in the conference call by telephone, please
call 800-289-0572 at approximately 2:45 p.m. CST. Please provide
the following ID Number: 4336853. A telephonic replay will be
available from 5:00 p.m. CST on Wednesday, November 8, 2006,
through 11:59 p.m. CST on Tuesday, November 14, 2006. To access the
replay, please call 888-203-1112 and enter the following ID Number:
4336853. 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 phosphate rechargeable battery technology.
Valence Technology holds an extensive, worldwide portfolio of
issued and pending patents relating to its Saphion technology and
lithium-ion phosphate rechargeable batteries. The company has
facilities in Austin, Texas, Las Vegas, Nevada, Mallusk, Ireland
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 Securities and Exchange
Commission, including our Report on Form 10-K for the year ended
March 31, 2006, 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. -0- *T VALENCE TECHNOLOGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS (in thousands, except per share amounts) Three Months Ended
Six Months Ended September 30, September 30, ------------------
------------------- 2006 2005 2006 2005 --------- --------
--------- --------- Total revenues $6,376 $5,518 $9,544 $8,923
Gross margin profit (loss) 1,079 (1,826) 1,101 (3,748) Operating
loss (3,142) (6,698) (7,302) (13,958) Net loss available to common
stockholders ($4,768) ($8,053) ($10,425) ($16,250) =========
======== ========= ========= Net loss per share available to common
stockholders $(0.05) $(0.09) $(0.11) $(0.18) ========= ========
========= ========= *T -0- *T VALENCE TECHNOLOGY, INC. AND
SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except
share amounts) September 30, 2006 March 31, 2006 ------------------
-------------- Assets Current assets: Total current assets $15,049
$8,292 ------------------ -------------- Total assets 18,724 11,632
------------------ -------------- Liabilities and Stockholders'
Deficit Current liabilities: Total current liabilities 6,057 12,542
------------------ -------------- Total liabilities 74,834 79,234
------------------ -------------- Commitments and contingencies - -
Redeemable convertible preferred stock 8,610 8,610
------------------ -------------- Total stockholders' deficit
(64,720) (76,212) ------------------ --------------
------------------ -------------- Total liabilities, preferred
stock and stockholders' deficit $18,724 $11,632 ==================
============== *T
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