As filed with the Securities and
Exchange Commission on July 24, 2000 Registration No. 333-
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------------------
VALENCE TECHNOLOGY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 77-0214673
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
301 CONESTOGA WAY
HENDERSON, NV 89015
(702) 558-1000
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
----------------------------
LEV M. DAWSON
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
VALENCE TECHNOLOGY, INC.
301 CONESTOGA WAY
HENDERSON, NV 89015
(702) 558-1000
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
COPIES OF CORRESPONDENCE TO:
C.N. FRANKLIN REDDICK III, ESQ.
TROOP STEUBER PASICH REDDICK & TOBEY, LLP
2029 CENTURY PARK EAST, 24TH FLOOR
LOS ANGELES, CALIFORNIA 90067
(310) 728-3000
-----------------------------
Approximate date of commencement of proposed sale
to the public: From time to time after the effective
date of this registration statement.
-----------------------------
If the only securities on this form are being offered pursuant to dividend
or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
========================================================================================================
Proposed Maximum Proposed Maximum
Title Of Shares Amount To Be Aggregate Price Aggregate Amount Of
To Be Registered Registered(1) Per Share(2) Offering Price(2) Registration Fee
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.001 846,665 19.44 19,751,001.12 $5,214.26(3)
par value per share
--------------------------------------------------------------------------------------------------------
Common Stock, $.001 169,333 19.44 3,291,833.52
par value per share,
issuable upon exercise
of warrants
=========================================================================================================
<FN>
(1) In the event of a stock split, stock dividend, or similar transaction
involving the Registrant's common stock, in order to prevent dilution, the
number of shares of Common Stock registered shall automatically increase to
cover the additional shares in accordance with Rule 416 under the
Securities Act.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) on the basis of the average high and low prices of
registrant's common stock reported on the Nasdaq Stock Market's National
Market on July 20, 2000.
(3) Paid on July 24, 2000 based on the registration of 1,015,998 shares of
Registrant's Common Stock.
</FN>
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
<PAGE>
Table of Contents
Page
The Company ............................................................ 1
About the Offering ..................................................... 1
Risk Factors ........................................................... 2
Disclosure Regarding Forward-Looking Statements ........................ 11
Incorporation By Reference ............................................. 11
Selling Stockholder .................................................... 13
Use of Proceeds ........................................................ 13
Plan of Distribution ................................................... 13
Legal Matters .......................................................... 14
Experts ................................................................ 14
<PAGE>
The information in this prospectus is not complete and may be changed. No
person may sell our common stock pursuant hereto until the registration
statement filed with the securities and exchange commission is effective. This
prospectus is not an offer to sell our common stock and it is not soliciting an
offer to buy the common stock in any state where the offer or sale is not
permitted.
PROSPECTUS
VALENCE TECHNOLGY, INC.
1,015,998 SHARES OF COMMON STOCK
(par value $0.001 per share)
o THIS IS AN OFFERING OF UP TO 1,015,998 SHARES OF COMMON STOCK OF VALENCE
TECHNOLOGY, INC. THE SELLING STOCKHOLDER IS OFFERING ANY AND ALL THE SHARES TO
BE SOLD IN THIS OFFERING.
o WE WILL NOT RECEIVE ANY OF THE PROCEEDS FROM THE SALE OF THE SHARES. WE
WILL RECEIVE PROCEEDS FROM THE SALE OF THE SHARES. WE WILL RECEIVE PROCEEDS FROM
THE EXERCISE OF WARRANTS AND THOSE PROCEEDS WILL BE USED FOR OUR GENERAL
CORPORATE PURPOSES.
o OUR COMMON STOCK IS TRADED ON THE NATIONAL MARKET SYSTEM OF THE NASDAQ
STOCK MARKET UNDER THE SYMBOL "VLNC." ON JULY 19, 2000, THE CLOSING SALE PRICE
OF THE COMMON STOCK ON THE NATIONAL MARKET SYSTEM WAS $19.625 PER SHARE, AND
THERE WERE 37,756,097 SHARES OF OUR COMMON STOCK OUTSTANDING.
SEE "RISK FACTORS" BEGINNING ON PAGE 2 FOR A DISCUSSION OF FACTORS YOU
SHOULD CONSIDER BEFORE YOU INVEST IN THE COMMON STOCK BEING SOLD WITH THIS
PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-----------------------
The date of this prospectus is ____ __, 2000.
<PAGE>
THE COMPANY
We design, develop, manufacture and market rechargeable lithium polymer
batteries for portable communication devices, also known as mobile communication
products, including notebook computers, personal digital assistants or PDAs,
handheld personal computers, or HPCs, and cellular telephones. Unlike competing
liquid lithium ion batteries that often require a metal casing to hold their
liquid electrolyte, our lithium polymer batteries are manufactured with a foil
casing, which makes them less bulky and less costly to produce.
To date, we have focused on the acquisition and development of our battery
technology, including the implementation of a production line, the manufacture
of prototype batteries for evaluation by potential customers, and the
development of an operating infrastructure. We received our first purchase order
for commercial grade lithium polymer batteries in November 1999 and currently
have purchase orders for approximately $17 million of batteries. We completed
the installation and qualification of our first automated, high volume
production line in 1999 and began commercial shipments of our batteries in
February 2000. At the present time, our ability to ship product is limited.
As used in this prospectus, the terms "we," "us," "our," the "Company" or
"Valence" mean Valence Technology, Inc. and its subsidiaries (unless the context
indicates a different meaning).
Our executive offices are located at 301 Conestoga Way, Henderson, NV 89015, and
our telephone number is (702) 558-1000.
ABOUT THE OFFERING
This prospectus may be used only in connection with the resale by Acqua
Wellington Value Fund Ltd. or its assigns, of 846,665 shares of the common stock
acquired by Acqua Wellington on June 29, 2000 and 169,333 shares of the common
stock upon Acqua Wellington's exercise of warrants to purchase such common
stock, as follows:
o up to 169,333 shares of common stock may be acquired and sold pursuant
to the exercise of warrants at $18.4547 per share, through June 29,
2003.
On July 19, 2000, there were 37,756,097 shares of our common stock outstanding.
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RISK FACTORS
AN INVESTMENT IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD NOT
MAKE AN INVESTMENT IF YOU CANNOT AFFORD THE LOSS OF YOUR ENTIRE INVESTMENT. IN
ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, YOU SHOULD CONSIDER
CAREFULLY THE FOLLOWING FACTORS IN EVALUATING VALENCE AND ITS BUSINESS BEFORE
PURCHASING ANY SHARES OF OUR COMMON STOCK.
RISKS RELATED TO OUR BUSINESS
WE ARE IN THE EARLY STAGES OF MANUFACTURING, AND OUR FAILURE TO DEVELOP THE
ABILITY TO EFFICIENTLY MANUFACTURE BATTERIES IN COMMERCIAL QUANTITIES WHICH
SATISFY OUR CUSTOMERS' PRODUCT SPECIFICATIONS COULD DAMAGE OUR CUSTOMER
RELATIONSHIPS AND RESULT IN SIGNIFICANT LOST BUSINESS OPPORTUNITIES FOR US. To
be successful, we must cost-effectively manufacture commercial quantities of our
batteries that meet customer specifications. Until recently, our batteries only
had been manufactured on our pilot manufacturing line, which is able to produce
prototype batteries in quantities sufficient to enable customer sampling and
testing and product development. Our manufacturing facilities will require
additional development to enable us to produce batteries cost-effectively,
according to customer specifications and on a commercial scale. To facilitate
commercialization of our products, we will need to reduce our manufacturing
costs. This includes being able to substantially raise and maintain battery
yields of commercial quality in a cost-effective manner. Failure to achieve
substantially increased yields of our batteries and to reduce unit-manufacturing
costs will preclude us from offering our batteries at a competitive price to the
market, which would impair our ability to attract current and future customers.
We are currently in the early stages of transitioning production to an automated
production line that will work with our newest battery technology in our
manufacturing facility in Mallusk, Northern Ireland. We have begun to
manufacture batteries on a commercial scale to fulfill our first significant
purchase orders. The redesign and modification of the Mallusk manufacturing
facility, including its customized manufacturing equipment, will continue to
require substantial engineering work and capital expenses and is subject to
significant risks, including risks of cost overruns and significant delays. In
addition, in order to scale up the manufacturing capacity, we will need to begin
qualification of additional automated production lines. In automating,
redesigning and modifying the manufacturing processes, we have been, and will
continue to depend on, several developers of automated production lines, all of
whom have limited experience in producing equipment for the manufacture of
batteries. A failure to successfully develop and implement a large scale
manufacturing facility capable of cost-effectively producing commercial
quantities of batteries and according to customer specifications would harm our
ability to serve the needs of our customers and threaten our future sales and
profits.
As part of our manufacturing ramp-up, we will need to hire and train a
substantial number of new manufacturing workers. The availability of skilled and
unskilled workers in Northern Ireland, the site of our manufacturing facility,
is limited due to a relatively low unemployment rate. As a result, we face the
risk that we may not:
o successfully hire and train the new manufacturing workers necessary
for the ramp-up of our Mallusk, Northern Ireland manufacturing
facility;
o successfully develop improved processes;
o design required production equipment;
o enter into acceptable contracts for the fabrication of required
production equipment;
o obtain timely delivery of required production equipment;
o implement multiple production lines; or
o successfully operate the Mallusk facility.
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<PAGE>
Our failure to successfully automate our production on a timely basis, if at
all, could damage our reputation, relationships with future and existing
customers, cause us to lose business and potentially prevent us from
establishing the commercial viability of our products.
IF WE CONTINUE TO EXPERIENCE DELAYS IN QUALIFYING OUR MANUFACTURING FACILITIES,
THIS COULD SIGNIFICANTLY DELAY OUR BRINGING COMMERCIAL QUANTITIES OF PRODUCT TO
MARKET AND INTERFERE WITH OUR ABILITY TO GENERATE THE REVENUE AND CASH THAT WE
NEED TO SUSTAIN OUR BUSINESS. We may be unable to meet our schedules regarding
delivery, installation, de-bugging and qualification of our Northern Ireland
facility production equipment, and face the prospect of further delays or
problems related to facility qualification because:
o most of the production equipment is being specifically manufactured
for us; thus, delays may occur since the design and delivery of this
equipment is not within our control;
o through our laboratory scale prototype work, we are modifying and
bringing many of the manufacturing processes that we are implementing
in this production equipment up to date for the first time and may
need to refine these processes, which could cause delays;
o even if we are able to refine our process, we may not be able to
produce the amount of qualification samples required by our customers;
and
o our customers generally require an extensive qualification period once
they receive their first commercial product off a production line.
Any qualification-related delays or problems would impair our ability to bring
our batteries to market and would harm our business by adversely affecting
revenue growth and our cash position. Any extended delays in bringing our
products to market could harm our competitive position and harm our economic
growth.
OUR LIMITED ABILITY TO MANUFACTURE LARGE VOLUMES OF BATTERIES MAY PREVENT US
FROM FULFILLING EXISTING ORDERS WHICH MAY HARM OUR BUSINESS. At the present time
our ability to ship product is limited. We currently have three outstanding
unfilled purchase orders for our batteries and are actively soliciting
additional purchase orders. We presently have limited quantities of batteries
available for sale and do not currently have the necessary equipment in
operation to manufacture a commercially adequate volume of products. We are
currently installing additional automated equipment at our facilities in
Mallusk, Northern Ireland and anticipate that this production facility will be
fully operational by the third quarter of calendar 2001, which will provide us
the capacity to manufacture and ship batteries in high volumes.
In 1993, we were ultimately unable to fulfill a purchase order for batteries
which incorporated a previous technology due to our inability to produce our
batteries on a commercial scale. If we cannot rapidly increase our production
capabilities to make sufficient quantities of commercially acceptable batteries,
we may not be able to fulfill existing purchase orders in a timely manner, if at
all. In addition, we may not be able to procure additional purchase orders,
which could cause us to lose existing and future customers, purchase orders,
revenue and profits.
WE MAY HAVE A NEED FOR ADDITIONAL CAPITAL. At March 31, 2000, we had cash and
cash equivalents of $24,556,000. After taking into account our cash and cash
equivalents, projected revenues and receipt of funds from other sources, we may
need to raise additional funding through debt or equity financing through fiscal
2001 to complete funding of planned capital expansion, research and product
development, marketing and general and administrative expenses, and to pursue
joint venture and other business opportunities. Our cash requirements, however
may vary materially from those now planned because of changes in our operations,
including changes in original equipment manufacturer (OEM) relationships or
market conditions. There can be no assurance that additional funds for these
purposes, whether from equity or debt financing agreements, will available on
favorable terms, if at all. If we need capital and cannot raise additional
funds, it may delay further development
and production of our batteries or otherwise delay our execution of our business
plan, all of which may have a material adverse effect on our operations and
financial condition.
WE HAVE A HISTORY OF LOSSES, HAVE AN ACCUMULATED DEFICIT AND MAY NEVER ACHIEVE
OR SUSTAIN SIGNIFICANT REVENUES OR PROFITABILITY. We have incurred operating
losses each year since inception in 1989 and had an accumulated deficit of
$223,582,000 as of March 31, 2000. We have working capital of $16 million as of
March 31, 2000, and have sustained recurring losses related primarily to the
research and development and marketing of our products. We expect to continue to
incur operating losses and negative cash flows through fiscal 2001, as we
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<PAGE>
continue our product development, begin to build inventory and continue our
marketing efforts. We may never achieve or sustain significant revenues or
profitability in the future.
IF OUR BATTERIES FAIL TO PERFORM AS EXPECTED, WE COULD LOSE EXISTING AND FUTURE
BUSINESS, AND OUR LONG-TERM ABILITY TO MARKET AND SELL OUR BATTERIES COULD BE
HARMED. If we manufacture our batteries in commercial quantities and they fail
to perform as expected, our reputation could be severely damaged, and we could
lose existing or potential future business. Even if the performance failure was
corrected, this performance failure might have the long-term effect of harming
our ability to market and sell our batteries.
BECAUSE WE DEPEND ON A SMALL NUMBER OF CUSTOMERS FOR OUR REVENUES, OUR RESULTS
OF OPERATIONS AND FINANCIAL CONDITION COULD BE HARMED IF WE WERE TO LOSE THE
BUSINESS OF ANY ONE OF THESE CUSTOMERS. To date, our three existing purchase
orders in commercial quantities are from two customers. We anticipate that sales
of our products to a limited number of key customers will continue to account
for a significant portion of our total revenues. We do not have long-term
agreements with any of our customers, and do not expect to enter into any
long-term agreements in the near future. As a result, we face the substantial
risk that any of the following events could occur:
o reduction, delay or cancellation of orders from a customer;
o development by a customer of other sources of supply;
o selection by a customer of devices manufactured by one of our
competitors for inclusion in future product generations;
o loss of a customer or a disruption in our sales and distribution
channels; and
o failure of a customer to make timely payment of our invoices.
If we were to lose one or more customers, or if we were to lose revenues due to
a customer's inability or refusal to continue to purchase our batteries, our
business, results of operations and financial condition could be harmed.
WE MUST CONTINUE TO EXPAND OUR EMPLOYEE BASE AND OPERATIONS IN ORDER TO
DISTRIBUTE OUR PRODUCTS COMMERCIALLY, WHICH MAY STRAIN OUR MANAGEMENT AND
RESOURCES AND COULD HARM OUR BUSINESS. During 1999, we grew rapidly, expanding
our manufacturing capacity significantly. We have grown from 184 employees at
March 1999 to 362 employees as of May 2000. We plan to expand our manufacturing
capability in the next six months by adding more equipment. We plan to expand
our sales and marketing organizations in addition to increasing the number of
manufacturing employees and adding to our operating team. To implement our
growth strategy successfully, we will have to increase our staff, including
personnel in sales and marketing, engineering, development and product support
capabilities, as well as third party and direct distribution channels. However,
we face the risk that we may not be able to attract new employees to
sufficiently increase our staff or product support capabilities, or that we will
not be successful in our sales and marketing efforts. Failure in any of these
areas could impair our ability to execute our plans for growth and adversely
affect our future profitability.
COMPETITION FOR PERSONNEL, IN PARTICULAR FOR PRODUCT DEVELOPMENT AND PRODUCT
IMPLEMENTATION PERSONNEL, IS INTENSE, AND WE MAY HAVE DIFFICULTY ATTRACTING THE
PERSONNEL NECESSARY TO EFFECTIVELY OPERATE OUR BUSINESS. We believe that our
future success will depend in large part on our ability to attract and retain
highly skilled technical, managerial and marketing personnel who are familiar
with and experienced in the battery industry, as well as skilled personnel to
operate our facility in Northern Ireland. If we cannot attract and retain
experienced sales and marketing executives, we may not achieve the visibility in
the marketplace that we need to obtain purchase orders, which would have the
result of lowering our sales and earnings. We compete in the market for
personnel against numerous companies, including larger, more established
competitors with significantly greater financial resources than us. We have
experienced difficulty in recruiting qualified personnel in the past, and we
cannot be certain that we will be successful in attracting and retaining the
skilled personnel necessary to operate our business effectively in the future.
BECAUSE OUR BATTERIES ARE PRIMARILY SOLD TO BE INCORPORATED INTO OTHER PRODUCTS,
WE RELY ON ORIGINAL EQUIPMENT MANUFACTURERS AND BATTERY PACK ASSEMBLERS TO
COMMERCIALIZE OUR PRODUCTS. WE MAY NOT OBTAIN
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<PAGE>
ADEQUATE ASSISTANCE FROM THESE THIRD PARTIES TO SUCCESSFULLY COMMERCIALIZE OUR
PRODUCTS. We rely heavily on assistance in gaining market acceptance for our
products from original equipment manufacturers, or OEMs (manufacturers who
produce complex equipment from components usually bought from other
manufacturers) and battery pack assemblers who incorporate our batteries into
products that they later sell to commercial manufacturers or the public. We will
therefore need to meet these companies' requirements by developing and
introducing on a timely basis, new products and enhanced, or modified, versions
of our existing products. OEMs and battery pack assemblers often require unique
configurations or custom designs for batteries, which must be developed and
integrated into their product well before the product is launched. This
development process not only requires substantial lead-time between the
commencement of design efforts for a customized battery system and the
commencement of volume shipments of the battery system to the customer, but also
requires the cooperation and assistance of the OEMs or battery pack assemblers
for purposes of determining the battery requirements for each specific
application. If we are unable to design, develop and introduce products that
meet original equipment manufacturers' and battery pack assemblers'
requirements, we may not be able to fulfill our obligations under existing
purchase orders, we may lose opportunities to enter into additional purchase
orders and our reputation may be damaged. As a result, we may not receive
adequate assistance from OEMs or battery pack assemblers to successfully
commercialize our products, which could impair our profitability.
WE DEPEND ON A SOLE SOURCE SUPPLIER FOR OUR ANODE RAW MATERIALS, AND UTILIZE A
LIMITED NUMBER OF SUPPLIERS FOR OTHER KEY RAW MATERIALS THAT WE USE IN
DEVELOPING AND MANUFACTURING OUR BATTERIES. IF WE CANNOT OBTAIN NECESSARY RAW
MATERIALS, OUR PRODUCTION OF BATTERIES WILL BE DELAYED. We depend on a sole
source supplier for our anode, or negative electrode, raw material. In addition,
we utilize a limited number of suppliers for other key raw materials used in
manufacturing and developing our batteries. We generally purchase raw materials
pursuant to purchase orders placed from time to time and have no long-term
contracts or other guaranteed supply arrangements with our sole or limited
source suppliers. As a result, we face the following risks relating to our
supply of raw materials necessary for operating our business:
o our suppliers may not be able to meet our requirements relative to
specifications and volumes for key raw materials, and we may not be
able to locate alternative sources of supply at an acceptable cost;
and
o we have in the past experienced delays in product development due to
the delivery of nonconforming raw materials from our suppliers, and if
in the future we are unable to obtain high quality raw materials in
sufficient quantities and on a timely basis, our production of
batteries may be delayed.
Any loss, delay or failure in obtaining key raw materials could impede our
ability to fulfill existing or future purchase orders and harm our reputation
and profitability.
IF OUR BATTERIES OR OUR CUSTOMERS' APPLICATIONS THAT INCORPORATE OUR BATTERIES
DO NOT ACHIEVE LASTING MARKET ACCEPTANCE, WE MAY LOSE POTENTIAL CUSTOMERS. To
achieve market acceptance, our batteries must offer significant performance or
other measurable advantages at a cost-effective rate as compared to other
current and potential alternative battery technologies in a broad range of
applications. Our batteries may not be able to achieve or sustain these
advantages. Even if our batteries provide meaningful price or performance
advantages, there is a risk our batteries may not be able to achieve or maintain
market acceptance in any potential market application. The success of our
products also will depend upon the level of market acceptance of OEMs and other
customers' end products that incorporate our batteries, a circumstance over
which we have little or no control. Our ability to realize these performance
advantages and our failure to achieve significant market acceptance with our
products could hurt our ability to attract customers in the future.
WE HAVE FOUR KEY EXECUTIVES. THE LOSS OF A SINGLE EXECUTIVE OR THE FAILURE TO
HIRE AND INTEGRATE CAPABLE NEW EXECUTIVES COULD HARM OUR BUSINESS. Our success
is highly dependent upon the active participation of four key executives. We do
not have written employment contracts or key man life insurance policies with
respect to any of these key members of management. Without qualified executives,
we face the risk that we will not be able to effectively run our business on a
day-to-day basis or execute our long-term business plan.
IF WE CANNOT PROTECT OR ENFORCE OUR EXISTING INTELLECTUAL PROPERTY RIGHTS OR IF
OUR PENDING PATENT APPLICATIONS DO NOT RESULT IN ISSUED PATENTS, WE MAY LOSE THE
ADVANTAGES OF OUR RESEARCH AND MANUFACTURING SYSTEMS. Our
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ability to compete successfully will depend on whether we can protect our
existing proprietary technology and manufacturing processes. We rely on a
combination of patent and trade secret protection, non-disclosure agreements and
cross-licensing agreements. These measures may not be adequate to safeguard the
proprietary technology underlying our batteries. Employees, consultants, and
others who participate in the development of our products may breach their
non-disclosure agreements with us, and we may not have adequate remedies in the
event of their breaches. In addition, our competitors may be able to develop
products that are equal or superior to our products without infringing on any of
our intellectual property rights. Moreover, we may not be able to effectively
protect our intellectual property rights outside of the United States.
We have established a program for intellectual property documentation and
protection in order to safeguard our technology base. We intend to vigorously
pursue enforcement and defense of our patents and our other proprietary rights.
We could incur significant expenses in preserving our proprietary rights, and
these costs could harm our financial condition.
We are also attempting to expand our intellectual property rights through our
applications for new patents. Patent applications in the United States are
maintained in secrecy until the patents that are applied for are ultimately
issued. Since publication of discoveries in the scientific or patent literature
tends to lag behind actual discoveries by several months, we cannot be certain
that we were the first creator of inventions covered by pending patent
applications or the first to file patent applications on such inventions.
Therefore, our pending patent applications may not result in issued patents and
our issued patents may not afford protection against a competitor. Our failure
to protect our existing proprietary technologies or to develop new proprietary
technologies may substantially impair our financial condition and results of
operations.
INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS BROUGHT AGAINST US COULD BE TIME
CONSUMING AND EXPENSIVE TO DEFEND. In recent years, there has been significant
litigation in the United States involving patents and other intellectual
property rights. While we currently are not engaged in any intellectual property
litigation or proceedings, we may become involved in these proceedings in the
future. In the future we may be subject to claims or inquiries regarding our
alleged unauthorized use of a third party's intellectual property. An adverse
outcome in litigation could force us to do one or more of the following:
o stop selling, incorporating or using our product that use the
challenged intellectual property;
o pay significant damages to third parties;
o obtain from the owners of the infringed intellectual property right a
license to sell or use the relevant technology, which license may not
be available on reasonable terms, or at all; or
o redesign those products or manufacturing processes that use the
infringed technology, which may be economically or technologically
infeasible.
Whether or not an intellectual property litigation claim is valid, the cost of
responding to it, in terms of legal fees and expenses and the diversion of
management resources, could be expensive and harm our business.
OUR BATTERIES CONTAIN POTENTIALLY DANGEROUS MATERIALS, WHICH COULD EXPOSE US TO
PRODUCT LIABILITY CLAIMS. In the event of a short circuit or other physical
damage to a battery, a reaction may result with excess heat or a gas being
generated and released. If the heat or gas is not properly released, the battery
may be flammable or potentially explosive. Our batteries that were based on an
earlier technology, have, in the past, smoked, caught fire and vented gas. If we
are unsuccessful in our efforts to reduce these risks in our current design, we
could be exposed to product liability litigation. In addition, our batteries
incorporate potentially dangerous materials, including lithium. It is possible
that these materials may require special handling or that safety problems may
develop in the future. We are aware that if the amounts of active materials in
our batteries are not properly balanced and if the charge/discharge system is
not properly managed, a dangerous situation may result. Other battery
manufacturers using technology similar to ours include special safety circuitry
within the battery to prevent such a dangerous condition. We expect that our
customers will have to use a similar type of circuitry in connection with their
use of our products.
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WE ARE ENGAGED IN ONGOING SAFETY TESTING OF OUR BATTERIES TO MEET CUSTOMER
REQUIREMENTS AND MAY NOT BE ABLE TO INCREASE COMMERCIAL SALES OF OUR BATTERIES
IF OUR PRODUCTS ARE NOT SUCCESSFUL IN THESE TESTS. We have conducted safety
testing of our batteries and have submitted batteries to Underwriters
Laboratories for certification, which is required by a number of OEMs prior to
placing a purchase order with us. Underwriters Laboratories has granted a
preliminary acceptance of an earlier generation of our batteries, pending a
manufacturing site audit. Those batteries, while similar to the batteries we are
selling today, are not of the current design and composition. Our current
batteries must be submitted for Underwriters Laboratories' approval, and
Underwriters Laboratories has not yet begun a scheduled audit of our Northern
Ireland manufacturing facility.
As part of our safety testing program, prototype batteries of various sizes,
designs and chemical formulations are subject to abuse testing, in which the
battery is subjected to conditions outside expected normal operating conditions.
Each new battery design will continue to require new safety testing. In
addition, safety problems may develop with respect to our current and future
battery technology that could prevent or delay commercial introduction of our
products.
ACCIDENTS AT OUR FACILITIES COULD DELAY PRODUCTION AND ADVERSELY AFFECT OUR
OPERATIONS. An accident in our facilities could occur. Any accident, whether due
to the production of our batteries or otherwise resulting from our facilities'
operations, could result in significant manufacturing delays or claims for
damages resulting from personal or property injuries, which would adversely
affect our operations and financial condition.
WE DEPEND UPON THE CONTINUED OPERATION OF A SINGLE MANUFACTURING FACILITY.
OPERATIONAL PROBLEMS AT THIS FACILITY COULD HARM OUR BUSINESS. Our revenues are
dependent upon the continued operation of our manufacturing facility in Northern
Ireland. The operation of a manufacturing plant involves many risks, including
potential damage from fire or natural disasters. In addition, we have obtained
permits to conduct our business as currently operated at the facility. There can
be no assurance that these permits would continue to be effective at the current
location if the facility were destroyed and rebuilt, or that we would be able to
obtain similar permits to operate at another location. There can be no assurance
that the occurrence of these or any other operational problems at our Northern
Ireland facility would not harm our business.
WE DO NOT FULLY CONTROL THE OPERATION OF OUR JOINT VENTURES' OPERATIONS,
STRATEGIES AND FINANCIAL DECISIONS, AND WE CANNOT ASSURE YOU THAT OUR PRODUCTS
WILL BE MARKETED SUCCESSFULLY THROUGH THESE VENTURES. At the present time, we
have investment interests in two operating joint ventures. We established a
joint venture company in Korea, Hanil Valence Co., Ltd., to manufacture, package
and distribute advanced rechargeable solid polymer batteries. We supply Hanil
Valence Co. with its proprietary laminates (film and laminate materials), from
which Hanil Valence Co. will manufacture batteries for the Korean market. In
addition, we will supply technology, initial equipment and product designs and
technical support for the Hanil Valence Co. joint venture out of our Northern
Ireland facility. We cannot be certain that the Hanil Valence Co. joint venture
will be profitable, and if this joint venture does not remain in business, we
would need to find other business partners and/or contract with third parties
for purposes of manufacturing, selling and distributing rechargeable batteries
in the Korean market.
We also established a joint venture company, Alliant/Valence, L.L.C., to market
our battery technology and technology obtained under our non-exclusive license
with Telecordia Technologies (formerly Bellcore) and to develop and to
manufacture batteries for our U.S. military customers, as well as for foreign
military sales activities. In connection with this joint venture, Alliant Power
Sources Company, an Alliant operating company, has ordered both battery
component material and finished battery cells from Valence to be used in the
construction of several different specialized batteries for military and
aerospace applications.
We do not control or manage either of these joint ventures. Consequently, we
must rely on the management skills of our venture partners to successfully
operate these ventures. Our joint venture partners may have economic, businesses
or legal interests or goals that conflict with ours. In addition, we may have
significant disagreements with our venture partners regarding strategic or
operational issues that could have material adverse effect on the ventures'
business or financial conditions. We may be required to fulfill the obligations
of our joint venture partners if they are unable to meet their obligations.
We also depend to a significant degree on local partners in our joint ventures
to provide us with regulatory and
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marketing expertise and familiarity with the local business environment. Any
disruption in our relationship with these parties could make it more difficult
to market our products in the geographic regions or to the customers to which
the joint venture relates. Unsuccessful ventures could also significantly damage
our reputation, making it more difficult to obtain purchase orders for our
batteries.
WE DO NOT HAVE A COLLABORATIVE PARTNER TO ASSIST US IN DEVELOPMENT OF OUR
BATTERIES, WHICH MAY LIMIT OUR ABILITY TO DEVELOP AND COMMERCIALIZE OUR
PRODUCTS. The use of alliances for our development, product design, volume
purchase and manufacturing and marketing expertise could reduce the need for
development and use of internal resources. We have received substantially all
our revenues to date from a research and development agreement for joint
development in the automotive market with Delphi Automotive Systems Group, which
we completed in May 1998. Although we have held discussions with OEMs in the
portable consumer electronics and telecommunications markets about possible
strategic relationships as a means to accelerate introduction of our batteries
into these markets, we may choose not to, or may not be able to, enter into any
such alliances. Further, even if we could collaborate with a desirable partner,
the partnership may not be successful. The success of any strategic alliance
that we may enter into depends on, among other things, the general business
condition of the partner, its commitment to the strategic alliance and the
skills and experience of its employees. Without a collaborative partner to
assist us in development of our batteries, our ability to develop and
commercialize our products may be limited.
WE EXPECT TO SELL A SIGNIFICANT PORTION OF OUR PRODUCTS TO CUSTOMERS LOCATED
OUTSIDE THE UNITED STATES. FOREIGN GOVERNMENT REGULATIONS, CURRENCY FLUCTUATIONS
AND INCREASED COSTS ASSOCIATED WITH INTERNATIONAL SALES COULD MAKE OUR PRODUCTS
UNAFFORDABLE IN FOREIGN MARKETS, WHICH WOULD REDUCE OUR FUTURE PROFITABILITY.
The largest of our initial product orders is with an international customer. We
expect that international sales will represent an increasingly significant
portion of our product sales. International sales can be subject to many
inherent risks that are difficult or impossible for us to predict or control,
including:
o changes in foreign government regulations and technical standards,
including additional regulation of rechargeable batteries or the
transport of lithium, which may reduce or eliminate our ability to
sell in certain markets;
o foreign governments may impose tariffs, quotas and taxes on our
batteries;
o requirements or preferences of foreign nations for domestic products
could reduce demand for our batteries;
o fluctuations in currency exchange rates relative to the U.S. dollar
could make our batteries unaffordable to foreign purchasers or more
expensive compared to those of foreign manufacturers;
o longer payment cycles typically associated with international sales
and potential difficulties in collecting accounts receivable may
reduce the future profitability of foreign sales;
o import and export licensing requirements in Northern Ireland or Korea
may reduce or eliminate our ability to sell in certain markets; and
o political and economic instability in Northern Ireland or Korea may
reduce the demand for our batteries or our ability to market our
batteries in foreign countries.
These risks may increase our costs of doing business internationally and reduce
our sales or future profitability.
POLITICAL INSTABILITY IN NORTHERN IRELAND COULD INTERRUPT MANUFACTURING OF OUR
BATTERIES AT OUR NORTHERN IRELAND FACILITY AND CAUSE US TO LOSE SALES AND
MARKETING OPPORTUNITIES. Northern Ireland has experienced significant social and
political unrest in the past and we cannot assure you that these instabilities
will not continue in the future. Any political instability in Northern Ireland
could temporarily or permanently interrupt our manufacturing of batteries at our
facility in Mallusk, Northern Ireland. Any delays could also cause us to lose
sales
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and marketing opportunities, as potential customers would find other vendors to
meet their needs.
RISKS ASSOCIATED WITH OUR INDUSTRY
THERE HAS BEEN, AND CONTINUES TO BE, A RAPID EVOLUTION OF BATTERY TECHNOLOGIES.
IF COMPETING TECHNOLOGIES THAT OUTPERFORM OUR BATTERIES WERE DEVELOPED AND
SUCCESSFULLY INTRODUCED, THEN OUR PRODUCTS MIGHT NOT BE ABLE TO COMPETE
EFFECTIVELY IN OUR TARGETED MARKET SEGMENTS. The battery industry has
experienced, and is expected to continue to experience, rapid technological
change. Rapid and ongoing changes in technology and product standards could
quickly render our products less competitive, or even obsolete. Various
companies are seeking to enhance traditional battery technologies, such as lead
acid and nickel cadmium. Other companies have recently introduced or are
developing batteries based on nickel metal hydride, liquid lithium ion and other
emerging and potential technologies. These competitors are engaged in
significant development work on these various battery systems and we believe
that much of this effort is focused on achieving higher energy densities for low
power applications such as portable electronics. One or more new, higher energy
rechargeable battery technologies could be introduced which could be directly
competitive with, or be superior to, our technology. The capabilities of many of
these competing technologies have improved over the past several years.
Competing technologies that outperform our batteries could be developed and
successfully introduced and, as a result, there is a risk that our products may
not be able to compete effectively in our targeted market segments.
OUR PRINCIPAL COMPETITORS HAVE GREATER FINANCIAL AND MARKETING RESOURCES THAN WE
DO AND THEY MAY THEREFORE DEVELOP BATTERIES SIMILAR OR SUPERIOR TO OURS OR
OTHERWISE COMPETE MORE SUCCESSFULLY THAN WE DO. Competition in the rechargeable
battery industry is intense. The industry consists of major domestic and
international companies, most of which have financial, technical, marketing,
sales, manufacturing, distribution and other resources substantially greater
than ours. There is a risk that other companies may develop batteries similar or
superior to ours. In addition, many of these companies have name recognition,
established positions in the market, and long standing relationships with OEMs
and other customers. We believe that our primary competitors are existing
suppliers of liquid lithium ion, competing polymer and, in some cases, nickel
metal hydride batteries. These suppliers include Sanyo, Matsushita Industrial
Co., Ltd. (Panasonic), Sony, Toshiba and SAFT America, Inc. All of these
companies are very large and have substantial resources and market presence. We
expect that we will compete against manufacturers of other types of batteries in
our targeted application segments, which include laptops, cellular telephones
and personal digital assistant products, on the basis of performance, size and
shape, cost and ease of recycling. There is also a risk that we may not be able
to compete successfully against manufacturers of other types of batteries in any
of our targeted applications.
LAWS REGULATING THE MANUFACTURE OR TRANSPORT OF BATTERIES MAY BE ENACTED WHICH
COULD RESULT IN A DELAY IN THE PRODUCTION OF OUR BATTERIES OR THE IMPOSITION OF
ADDITIONAL COSTS THAT WOULD HARM OUR ABILITY TO BE PROFITABLE. At the present
time, international, federal, state or local law does not directly regulate the
storage, use and disposal of the component parts of our batteries or the
transport of our batteries. However, laws and regulations may be enacted in the
future which could impose environmental, health and safety controls on the
storage, use, and disposal of certain chemicals and metals used in the
manufacture of lithium polymer batteries as well as regulations governing the
transport of our batteries. Satisfying any future laws or regulations could
require significant time and resources from our technical staff and possible
redesign which may result in substantial expenditures and delays in the
production of our product, all of which could harm our business and reduce our
future profitability.
GENERAL RISKS ASSOCIATED WITH STOCK OWNERSHIP
CORPORATE INSIDERS OR AFFILIATES WILL BE ABLE TO EXERCISE SIGNIFICANT CONTROL
OVER MATTERS REQUIRING STOCKHOLDER APPROVAL THAT MIGHT NOT BE IN THE BEST
INTERESTS OF OUR STOCKHOLDERS AS A WHOLE. As of May 31, 2000, our officers,
directors, and their affiliates as a group beneficially owned approximately
21.1% of our outstanding common stock. Carl Berg, one of our directors, owns a
substantial portion of that amount. As a result, these stockholders will be able
to exercise significant control over all matters requiring stockholder approval,
including the election of directors and the approval of significant corporate
transactions, which could delay or prevent someone from acquiring or merging
with us. The interest of our officers and directors, when acting in their
capacity as stockholders, may lead them to:
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o vote for the election of directors who agree with the incumbent
officers' or directors' preferred corporate policy; or
o oppose or support significant corporate transactions when these
transactions further their interests as incumbent officers or
directors, even if these interests diverge from their interests as
shareholders per se and thus from the interests of other shareholders.
SOME PROVISIONS OF OUR CHARTER DOCUMENTS MAY MAKE TAKEOVER ATTEMPTS DIFFICULT,
WHICH COULD DEPRESS THE PRICE OF OUR STOCK AND LIMIT THE PRICE POTENTIAL
ACQUIRERS MAY BE WILLING TO PAY FOR YOUR SHARES. Our board of directors has the
authority, without any action by the stockholders, to issue additional shares of
our preferred stock, which shares may be given superior voting, liquidation,
distribution and other rights as compared to those of our common stock. The
rights of the holders of our capital stock will be subject to, and may be
adversely affected by, the rights of the holders of any preferred stock that may
be issued in the future. The issuance of additional shares of preferred stock
could have the effect of making it more difficult for a third party to acquire a
majority of our outstanding voting stock. These provisions may have the effect
of delaying, deferring or preventing a change in control, may discourage bids
for our common stock at a premium over its market price and may decrease the
market price, and infringe upon the voting and other rights of the holders, of
our common stock.
CONVERSION OF PREFERRED STOCK AND SALES OF COMMON STOCK BY CC INVESTMENTS MAY
DEPRESS THE PRICE OF OUR COMMON STOCK AND SUBSTANTIALLY DILUTE YOUR STOCK. If CC
Investments LDC ("CC Investments") were to exercise all of the warrants it holds
and convert all of the shares of preferred stock it owns, as of June 18, 2000,
it would then own approximately 1,080,479 shares of our common stock. This
amount includes 632,718 shares of our common stock that CC Investments would
acquire upon their conversion of the shares of Series B Preferred Stock it
currently holds. Our Series B Preferred Stock has a variable conversion rate and
is convertible into a larger amount of shares when our common stock trades at a
price below $6.03 in six out of ten consecutive trading days. In addition, the
number of shares into which the preferred stock converts increases at 6% per
year. If CC Investments exercises additional warrants or converts its preferred
stock into shares of our common stock and sells the shares into the market,
these sales could depress the market price of our common stock and would dilute
your holdings in our common stock. Additionally, dilution or the potential for
dilution could harm our ability to raise capital through the future sale of
equity securities.
OUR STOCK PRICE IS VOLATILE. The market price of the shares of our common stock
has been and is likely to continue to be highly volatile. Factors that may have
a significant effect on the market price of our common stock include the
following:
o fluctuation in our operating results;
o announcements of technological innovations or new commercial products
by us or our competitors;
o failure to achieve operating results projected by securities analysts;
o governmental regulation;
o developments in our patent or other proprietary rights or our
competitors' developments;
o our relationships with current or future collaborative partners; and
o other factors and events beyond our control.
In addition, the stock market in general has experienced extreme volatility that
often has been unrelated to the operating performance of particular companies.
These broad market and industry fluctuations may adversely affect the trading
price of our common stock, regardless of our actual operating performance.
As a result of this potential stock price volatility, investors may be unable to
resell their shares of our common stock
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at or above the cost of their purchase prices. In addition, companies that have
experienced volatility in the market price of their stock have been the object
of securities class action litigation. If we were the subject of securities
class action litigation, this could result in substantial costs, a diversion of
our management's attention and resources and harm to our business and financial
condition.
FUTURE SALES OF CURRENTLY OUTSTANDING SHARES COULD ADVERSELY AFFECT OUR STOCK
PRICE. The market price of our common stock could drop as a result of sales of a
large number of shares in the market or in response to the perception that these
sales could occur. In addition these sales might make it more difficult for us
to sell equity or equity-related securities in the future at a time and price
that we deem appropriate. We had outstanding 37,756,097 shares of common stock,
based upon shares outstanding as of July 19, 2000 and the conversion of all of
our Series B Preferred Stock. Of these shares, most will be registered and
freely tradable. Included in these shares are 950,000 shares issued to a wholly
owned subsidiary, which pledged these shares to secure our obligations in
accordance with the settlement of a class action lawsuit. On May 8, 2000, the
court approved the parties' settlement agreement for this class action lawsuit
and issued an order formally dismissing the case. Under the terms of the
settlement, the plaintiffs' settlement counsel, or their authorized agents,
acting on behalf of the settlement class and subject to the supervision and
direction of the court, will administer and calculate the claims submitted by
the settlement class members and will oversee distribution of the balance of the
settlement fund to the authorized claimants as of the effective date of the
settlement. The settlement fund will be applied in the following order: (a) to
pay counsel to the representative plaintiffs attorneys' fees the fee and expense
award (as defined in the settlement and if and to the extent allowed by the
court); (b) to pay all costs and expenses reasonably and actually incurred in
connection with providing notice i.e. locating class members; (c) to pay the
taxes and tax expenses as described in the settlement agreement; and (d) to
distribute the balance of the settlement fund to authorized claimants as allowed
by the terms of the settlement, the Court or the Plan of Allocation (as defined
in the settlement). In addition, we have filed registration statements on Form
S-8 under the Securities Act of 1933 that cover 1,414,526 shares of common stock
pursuant to outstanding but unexercised vested options to acquire our common
stock.
WE DO NOT INTEND TO PAY DIVIDENDS AND THEREFORE YOU WILL ONLY BE ABLE TO RECOVER
YOUR INVESTMENT IN OUR COMMON STOCK, IF AT ALL, BY SELLING THE SHARES OF OUR
STOCK THAT YOU HOLD. Some investors favor companies that pay dividends. We have
never declared or paid any cash dividends on our common stock. We currently
intend to retain any future earnings for funding growth and we do not anticipate
paying cash dividends on our common stock in the foreseeable future. Because we
may not pay dividends, your return on an investment in our shares likely depends
on your ability to sell our stock at a profit.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains statements that constitute forward-looking statements
within the meaning of Section 21E of the Exchange Act of 1934 and Section 27A of
the Securities Act of 1933. The words "expect," "estimate," "anticipate,"
"predict," "believe" and similar expressions and variations thereof are intended
to identify forward-looking statements. Such statements appear in a number of
places in this prospectus and include statements regarding our intent, belief or
current expectations regarding our strategies, plans and objectives, our product
release schedules, our ability to design, develop, manufacture and market
products, our intentions with respect to strategic acquisitions, and the ability
of our products to achieve or maintain commercial acceptance. Any
forward-looking statements are not guarantees of future performance and involve
risks and uncertainties. Actual results may differ materially from those
projected in this prospectus, for the reasons, among others, described in the
Risk Factors section beginning on page 2. You should read the Risk Factors
section carefully, and should not place undue reliance on any forward-looking
statements, which speak only as of the date of this prospectus. We undertake no
obligation to release publicly any updated information about forward-looking
statements to reflect events or circumstances occurring after the date of this
prospectus or to reflect the occurrence of unanticipated events.
INCORPORATION BY REFERENCE
We are a reporting company and file annual, quarterly and current reports,
proxy statements and other information with the SEC. You may read and copy these
reports, proxy statements and other information at the SEC's public reference
rooms in Washington, DC, New York, NY and Chicago, IL. You can request copies of
these documents by writing to the SEC and paying a fee for the copying cost.
Please call the SEC at 1-800-SEC-0330 for
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<PAGE>
more information about the operation of the public reference rooms. Our SEC
filings are also available at the SEC's web site at "http://www.sec.gov."
In addition, you can read and copy our SEC filings at the office of the
National Association of Securities Dealers, Inc. at 1735 "K" Street,
Washington, DC 20006.
The SEC allows us to "incorporate by reference" information that we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below and any future filings we will make with
the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934:
- Annual Report on Form 10-K for the year ended March 31, 2000, filed June
29, 2000;
- Current Report on Form 8-K dated June 22, 2000 and filed June 29, 2000;
- Current Report on Form 8-K dated June 8, 2000 and filed June 14, 2000; and
- The description of the common stock contained in Valence's Registration
Statement on Form 8-A filed with the SEC under the Securities Exchange Act
of 1934.
You may request a copy of these filings at no cost, by writing, telephoning
or e-mailing us at the following address:
VALENCE TECHNOLOGY, INC.
ATTENTION: JAY L. KING, CHIEF FINANCIAL OFFICER
301 CONESTOGA WAY, HENDERSON, NV 89015
TEL. -- (702) 558-1000; EMAIL - [email protected]
This prospectus is part of a Registration Statement we filed with the
SEC. You should rely only on the information incorporated by reference or
provided in this prospectus and the Registration Statement. We have not
authorized anyone else to provide you with different information. You should not
assume that the information in this prospectus or any supplement is accurate as
of any date other than the date on the front of those documents.
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SELLING STOCKHOLDER
The following table contains information about beneficial ownership of the
selling stockholder, in our equity securities as of July 19, 2000, to the extent
known by the Company. Other than in its capacity as a stockholder, the selling
stockholder does not have a material relationship with us. We do not know if,
when, or in what amounts the selling stockholder will exercise its warrants and
sell shares of the common stock. Therefore, we cannot estimate how many shares
the selling stockholder will hold at any time during, or after, the offering.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
OWNED
PRIOR TO
SELLING STOCKHOLDER OFFERING*
------------------- ------------- NUMBER OF
SHARES
NUMBER PERCENT OFFERED**
------------- ------- ---------
<S> <C> <C> <C>
Acqua Wellington Value Fund Ltd..... 1,015,998 2.69 1,015,998
<FN>
* Includes all shares deemed beneficially owned under Rules of the
Securities and Exchange Commission, due to the ownership of currently
exercisable warrants for the purchase of up to 169,333 shares of
common stock.
** Any number of shares up to the number shown.
</FN>
</TABLE>
USE OF PROCEEDS
We will not receive any proceeds from the sale of any shares offered by the
selling stockholder under this prospectus, but will receive proceeds from the
exercise of warrants by the selling stockholder, based on the exercise prices of
the warrants, as set forth on page 1 above. Any such proceeds received will be
used for general operating purposes of the Company.
PLAN OF DISTRIBUTION
We are registering 1,015,998 shares of common stock on behalf of the selling
stockholder.
The selling stockholder has advised us that the sale or distribution of the
common stock may be effected directly to purchasers or through one or more
underwriters, brokers, dealers or agents from time to time in one or more types
of transactions (which may involve crosses or block transactions):
o on the Nasdaq National Market or on another public exchange;
o in negotiated transactions;
o through put or call options relating to the shares;
o through short sales of shares; or
o a combination of these methods of sale, at market prices or at
negotiated prices.
The selling stockholder has advised us that it has not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of the Company's common stock pursuant to this
registration statement.
The selling stockholder and any broker-dealers that act in connection with the
sale of shares might be considered "underwriters" within the meaning of Section
2(11) of the Securities Act. Any commissions received by broker-
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dealers and any profit on the resale of the shares sold by them might be
considered to be underwriting discounts or commissions under the Securities Act.
Because the selling stockholder may be considered an underwriter within the
meaning of Section 2(11) of the Securities Act, the selling stockholder will be
required to deliver a prospectus in connection with the sale of its shares. We
have informed the selling stockholder that the anti-manipulative provisions of
Regulation M under the Securities and Exchange Act may apply to sales in the
market.
The following information is required to be disclosed in a prospectus supplement
or, if necessary, an amendment to the registration statement:
o the specific shares to be sold;
o the respective purchase prices and public offering prices;
o the names of any agent, dealer or underwriter; and
o any applicable commissions or discounts.
LEGAL MATTERS
The validity of any common stock offered by this prospectus or any
supplement will be passed upon for Valence by Troop Steuber Pasich Reddick &
Tobey, LLP, Los Angeles, California.
EXPERTS
The financial statements as of March 28, 1999 and for the years ended
March 28, 1999 and March 29, 1998, incorporated by reference in this prospectus,
have been so incorporated in reliance on the report (which includes an
explanatory paragraph regarding substantial doubt about Valence's ability to
continue as a going concern) of PricewaterhouseCoopers LLP, independent
accountants, given on authority of said firm as experts in auditing and
accounting.
The consolidated financial statements incorporated in this prospectus by
reference from the Company's Annual Report on Form 10-K for the year ended March
31, 2000 have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report, which is incorporated by reference, and has been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
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-------------------------------------------------------------------------------
You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement to this prospectus. We have not
authorized anyone else to provide you with different information. The selling
stockholders should not make an offer of these shares in any state where the
offer is not permitted. You should not assume that the information in this
prospectus or any supplement to this prospectus is accurate as of any date other
than the date on the cover page of this prospectus or any supplement.
-------------------------------------------------------------------------------
VALENCE TECHNOLOGY, INC.
PROSPECTUS
____ __, 2000
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth all expenses payable by the Registrant in
connection with the sale of the common stock being registered. All the amounts
shown are estimates except for the registration fee.
Registration fee...................................... $ 5,214.26
Legal fees and expenses............................... $ 10,000.00
Accounting fees and expenses.......................... $ 4,000.00
Miscellaneous......................................... $ 1,000.00
------------
Total................................................. $ 20,214.26
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Under Section 145 of the Delaware General Corporation Law, the Registrant
has broad powers to indemnify its directors and officers against liabilities
they may incur in such capacities, including liabilities under the Securities
Act of 1933, as amended ("Securities Act"). The Registrant's Bylaws also provide
that the Registrant will indemnify its directors and executive officers and may
indemnify its other officers, employees and other agents to the fullest extent
permitted by Delaware law.
The Registrant's Restated Certificate of Incorporation ("Restated
Certificate") provides that the liability of its directors for monetary damages
shall be eliminated to the fullest extent permissible under Delaware law.
Pursuant to Delaware law, this includes elimination of liability for monetary
damages for breach of the directors' fiduciary duty of care to the Registrant
and its stockholders. These provisions do not eliminate the directors' duty of
care and, in appropriate circumstances, equitable remedies such as injunctive or
other forms of non-monetary relief will remain available under Delaware law. In
addition, each director will continue to be subject to liability for breach of
the director's duty of loyalty to the Registrant, for acts or omissions not in
good faith or involving intentional misconduct, for knowing violations of law,
for any transaction from which the director derived an improper personal
benefit, and for payment of dividends or approval of stock repurchases or
redemptions that are unlawful under Delaware law. The provision also does not
affect a director's responsibilities under any other laws, such as the federal
securities laws or state or federal environmental laws.
The Registrant has entered into agreements with its directors and officers
that require Valence to indemnify such persons to the fullest extent authorized
or permitted by the provisions of the Restated Certificate and Delaware law
against expenses, judgments, fines, settlements and other amounts actually and
responsibly incurred (including expenses of a derivative action) in connection
with any proceeding, whether actual or threatened, to which any such person may
be made a party by reason of the fact that such person is or was a director,
officer, employee or other agent of the Registrant or any of its affiliated
enterprise. Delaware law permits such indemnification, provided such person
acted in good faith and in a manner such person reasonably believed to be in or
not opposed to the best interest of the Registrant and, with respect to any
criminal proceeding, had no reasonable cause to believe his or her conduct was
unlawful. The indemnification agreements also set forth certain procedures that
will apply in the event of a claim for indemnification thereunder. In addition,
the Registrant maintains director and officer liability insurance which, subject
to certain exceptions and limitations, insures directors and officers for any
alleged breach of duty, neglect, error, misstatement, misleading statement,
omission or act in their respective capacities as directors and officer of the
Registrant.
At present, there is no pending litigation or proceeding involving a
director or officer of the Registrant as to which indemnification is being
sought nor is the Registrant aware of any threatened litigation that may result
in claims for indemnification by any officer or director.
Page II-1
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ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following exhibits are filed herewith or incorporated by reference
herein:
EXHIBIT
NUMBER EXHIBIT TITLE
-------- ---------------------------------------------------------------------
5.1 Opinion of Troop Steuber Pasich Reddick & Tobey, LLP.
23.1 Consent of PricewaterhouseCoopers LLP, independent accountants.
23.2 Consent of Deloitte & Touche LLP, independent auditors.
23.3 Consent of Troop Steuber Pasich Reddick & Tobey, LLP (included in
Exhibit 5.1).
24.1 Power of Attorney of certain directors and officers of the registrant
(contained on Page II-4).
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of common
stock offered (if the total dollar value of common stock offered would not
exceed that which was registered) and any deviation from the low or high and of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement; provided,
however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
registrants pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the common stock offered therein, and the
offering of such common stock at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the common stock being registered which remain unsold at the termination of
the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (and, where applicable,
each filing of an employee benefit
Page II-2
<PAGE>
plan's annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the common stock offered therein, and the
offering of such common stock at that time shall be deemed to be the initial
bona fide offering thereof.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of periodic
report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act") containing information required to be included
in a post-effective amendment that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the common stock offered therein, and the offering of such common
stock at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes to file, during any period in
which offers or sales are being made, a post-effective amendment to this
Registration Statement to include any material information with respect to the
plan of distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement.
The undersigned Registrant hereby undertakes to remove from registration by
means of a post-effective amendment any of the common stock being registered
which remain unsold at the termination of the offering.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described in Item 14 or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the common stock being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned Registrant undertakes that: (1) for purposes of determining
any liability under the Securities Act, the information omitted from the form of
prospectus as filed as part of the registration statement in reliance upon Rule
430A and contained in the form of prospectus filed by the Registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of the registration statement as of the time it was declared effective; and
(2) for the purpose of determining any liability under the Securities Act, each
post-effective amendment that contained a form of prospectus shall be deemed to
be a new registration statement relating to the common stock offered therein,
and the offering of such common stock at that time shall be deemed to be the
initial bona fide offering thereof.
Page II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Henderson, State of Nevada on July 24, 2000.
Valence Technology, Inc.
By: /s/ LEV M. DAWSON
-------------------------
Lev M. Dawson
Chairman of the Board,
Chief Executive Officer and President
POWER OF ATTORNEY
Know all persons by these presents, that each person whose signature
appears below constitutes and appoints Lev M. Dawson his true and lawful
attorney-in-fact and agent, with full power of substitution and resubsitution,
for him and in his name, place and stead, in any and all capacities, to sign any
or all amendments (including post-effective amendments) to the Registration
Statement on Form S-3, and to file the same, with all exhibits thereto, and all
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
------------------------ ------------------------------------------------- ---------------
<S> <C> <C>
/s/ LEV M. DAWSON Chairman of the Board, Chief Executive Officer July 24, 2000
------------------------ and President (Principal Executive Officer)
Lev M. Dawson
/s/ JAY L. KING Chief Financial Officer (Principal Financial and July 24, 2000
------------------------ Accounting Officer)
Jay L. King
/s/ CARL E. BERG Director July 24, 2000
------------------------
Carl E. Berg
/s/ ALAN F. SHUGART Director July 24, 2000
------------------------
Alan F. Shugart
Director July __, 2000
------------------------
Bert C. Roberts, Jr.
</TABLE>
Page II-4
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBIT TITLE
-------- ----------------------------------------------------------------------
5.1 Opinion of Troop Steuber Pasich Reddick & Tobey, LLP.
23.1 Consent of PricewaterhouseCoopers LLP, independent accountants.
23.2 Consent of Deloitte & Touche LLP, independent auditors.
23.3 Consent of Troop Steuber Pasich Reddick & Tobey, LLP (included in
Exhibit 5.1).
24.1 Power of Attorney of certain directors and officers of the Registrant
(contained on Page II-4).
Page II-5
