Valence Reports Financial Results for the First Quarter of Fiscal Year 2007

Valence Technology Inc. reported results for the three-month period ending June 30, 2006. For the first quarter of fiscal year 2007, Valence Technology reported revenues of $3.2 million, compared to $3.4 million in the first quarter of fiscal year 2006. Revenue for the quarter was negatively impacted by production delays of the N-Charge small format battery, which was affected by the Underwriters Laboratories' recertification process. This created a backlog of N-Charge batteries which the company expects to fulfill during the second quarter of fiscal 2007. The company reported a net loss available to common stockholders of $5.7 million, or $0.06 per basic and diluted share, in the first quarter of fiscal year 2007 compared to a net loss available to common stockholders of $8.2 million, or $0.09 per basic and diluted share, in the first quarter of fiscal year 2006, and a net loss available to common stockholders of $9.6 million, or $0.11 per basic and diluted share, in the fourth quarter of fiscal year 2006.

"We are pleased with the results of our cost reduction programs over the last year and we are seeing the benefits of a lot of hard work by our team which is evidenced by our reaching a key goal of positive gross margin in the first quarter of fiscal 2007. The recent demand for our large-format Saphion® batteries further demonstrates that we are well positioned to gain market share in our core markets," said Dr. James R. Akridge, President and Chief Executive Officer of Valence Technology Inc. "We will remain focused on growing revenue, reducing costs and improving gross margins, while improving shareholder value."