luckie
06-19-2006, 01:48 PM
VALENCE TECHNOLOGY
Valence auditors issue 'going concern' letter
Austin-based battery maker has lost millions developing new technology.
By Dan Zehr
AMERICAN-STATESMAN STAFF
Saturday, June 17, 2006
http://www.statesman.com/business/content/business/stories/technology/06/17valence.html
Auditors for Valence Technology Inc. will include a "going concern" warning in the company's upcoming annual report, raising questions about its financial prospects. Valence postponed the release of its fourth-quarter earnings and annual report Monday, saying it and auditors Deloitte & Touche LLP needed more time to finalize its annual regulatory filing. The company, which has never reported a profit, now plans to report its earnings June 29. Valence officials declined to comment. Deloitte's auditors did not return a call seeking comment Friday.
"That's the most serious opinion an auditor could give," said Michael Granof, an accounting professor at the McCombs School of Business at the University of Texas. "That's not to say the company won't survive, but the trend is not very favorable." Going-concern opinions often are disastrous, Granof said, because they make it extremely difficult to persuade investors or banks to give money to such struggling companies.
In recent years, Valence has operated largely on funding from its chairman and largest shareholder, Carl Berg, who has pumped more than $100 million into the company. From its founding in 1989 to the end of 2005, it had accumulated losses of about $485 million. In its most recent quarterly report, Valence said it lost $8.3 million on $4.8 million in revenue in the last three months of 2005.
The company completed the transition of its manufacturing facilities to China over the past year, a move that has cut production costs. And it has signed deals to put its batteries in Segway scooters and Graham-Field electricity-powered wheel- chairs. Valence makes rechargeable batteries based on a compound that is more environmentally friendly than previous technologies. It's also a more stable compound, so it can be used in larger forms for applications that require more power.
The company increasingly has targeted its products for industrial uses, such as battery-powered cars and back-up power sources for cell phone towers. It has scaled back sales of its smaller-format batteries, which it sold in consumer electronics stores as backup batteries for notebook computers. Valence is the target of a lawsuit filed by Canadian utility Hydro-Quebec, saying the company had infringed on a patent first filed by University of Texas professor John Goodenough, which Hydro-Quebec licensed from UT in 1997. Valence disputed the claim, saying at the that time it "has a strong position with regard to our (intellectual property), and we will vigorously defend this position."
Valence auditors issue 'going concern' letter
Austin-based battery maker has lost millions developing new technology.
By Dan Zehr
AMERICAN-STATESMAN STAFF
Saturday, June 17, 2006
http://www.statesman.com/business/content/business/stories/technology/06/17valence.html
Auditors for Valence Technology Inc. will include a "going concern" warning in the company's upcoming annual report, raising questions about its financial prospects. Valence postponed the release of its fourth-quarter earnings and annual report Monday, saying it and auditors Deloitte & Touche LLP needed more time to finalize its annual regulatory filing. The company, which has never reported a profit, now plans to report its earnings June 29. Valence officials declined to comment. Deloitte's auditors did not return a call seeking comment Friday.
"That's the most serious opinion an auditor could give," said Michael Granof, an accounting professor at the McCombs School of Business at the University of Texas. "That's not to say the company won't survive, but the trend is not very favorable." Going-concern opinions often are disastrous, Granof said, because they make it extremely difficult to persuade investors or banks to give money to such struggling companies.
In recent years, Valence has operated largely on funding from its chairman and largest shareholder, Carl Berg, who has pumped more than $100 million into the company. From its founding in 1989 to the end of 2005, it had accumulated losses of about $485 million. In its most recent quarterly report, Valence said it lost $8.3 million on $4.8 million in revenue in the last three months of 2005.
The company completed the transition of its manufacturing facilities to China over the past year, a move that has cut production costs. And it has signed deals to put its batteries in Segway scooters and Graham-Field electricity-powered wheel- chairs. Valence makes rechargeable batteries based on a compound that is more environmentally friendly than previous technologies. It's also a more stable compound, so it can be used in larger forms for applications that require more power.
The company increasingly has targeted its products for industrial uses, such as battery-powered cars and back-up power sources for cell phone towers. It has scaled back sales of its smaller-format batteries, which it sold in consumer electronics stores as backup batteries for notebook computers. Valence is the target of a lawsuit filed by Canadian utility Hydro-Quebec, saying the company had infringed on a patent first filed by University of Texas professor John Goodenough, which Hydro-Quebec licensed from UT in 1997. Valence disputed the claim, saying at the that time it "has a strong position with regard to our (intellectual property), and we will vigorously defend this position."