AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 8, 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 (I.R.S. Employer
of Incorporation or Identification Number)
Organization)
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 Proposed
Maximum Maximum Amount Of
Title Of Shares Amount To Be Aggregate Price Aggregate Registration
To Be Registered Registered(1) Per Share(2) Offering Price(2) Fee(3)
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.001 43,750 $37.19 $1,627,062.50 $429.55
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 March 6, 2000.
(3) Paid on March 7, 2000 based on the registration of 43,750 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>
Subject to Completion, dated March 8, 2000
PROSPECTUS
VALENCE TECHNOLGY, INC.
43,750 SHARES OF COMMON STOCK
(par value $0.001 per share)
THIS IS AN OFFERING OF UP TO 43,750 SHARES OF COMMON STOCK OF
VALENCE TECHNOLOGY, INC. ("VALENCE" OR THE "COMPANY"). THE SELLING STOCKHOLDER
NAMED ON PAGE 2 OF THIS PROSPECTUS IS OFFERING ANY AND ALL THE SHARES TO BE SOLD
IN THIS OFFERING. VALENCE WILL NOT RECEIVE ANY OF THE PROCEEDS OF THE OFFERING.
VALENCE'S COMMON STOCK IS TRADED ON THE NATIONAL MARKET SYSTEM OF
THE NASDAQ STOCK MARKET UNDER THE SYMBOL "VLNC." ON MARCH 1, 2000, THE CLOSING
SALE PRICE OF THE COMMON STOCK ON THE NATIONAL MARKET SYSTEM WAS $ 35.84 PER
SHARE, AND THERE WERE 36,754,794 SHARES OF OUR COMMON STOCK OUTSTANDING.
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 INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. NO PERSON MAY SELL THE COMPANY'S 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 THE COMPANY'S 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.
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.
-----------------------
Our executive offices are located at 301 Conestoga Way, Henderson,
NV 89015, and our telephone number is (702) 558-1000.
The date of this prospectus is _____________, 2000.
<PAGE>
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).
PROSPECTUS SUMMARY
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we have filed with
the SEC utilizing a "shelf" registration process. Under this shelf process, the
"Selling Stockholder" may from time to time offer up to 43,750 shares of Valence
common stock, .001 par value for sale, at prices and terms to be determined at
the time or times of sale. The common stock is sometimes referred to as
"securities."
Each time these securities are offered, a prospectus supplement will be
provided containing specific information about the terms of the offering.
ABOUT VALENCE
OUR BUSINESS
We are engaged in research and development to produce advanced rechargeable
batteries based upon specialized technologies referred to in the industry as
lithium ion and polymer technologies, and expect to commence manufacturing such
batteries in commercial quantities within the calendar year. Our objective is to
become a leading provider of rechargeable batteries. In July 1995, we obtained a
license to a related specialized battery technology from Bell Communications
Research, Inc. Since that time, we have been working to integrate the Bell
Communications technology with our own lithium polymer battery technology. At
the same time, we have continued the redesign and modifications to our
manufacturing equipment in Northern Ireland to support the potential future
commercial introduction of this new battery design.
THE MARKET FOR OUR BATTERIES
Widespread use of a variety of portable consumer electronics such as
portable computers, cellular, telephones, camcorders and handheld power tools,
as well as continued demand from conventional applications such as automobiles,
have resulted in large markets for rechargeable batteries. These new and
conventional applications are placing growing demands on existing battery
technologies to deliver increasing amounts of electricity through smaller and
lighter batteries. In some cases, current battery capabilities are a major
limitation to the introduction of enhanced electronic products.
OUR STAGE OF DEVELOPMENT
We are a development stage company whose primary activities to date have
been:
- acquiring and developing technology;
- implementing a production line;
- manufacturing limited quantities of prototype batteries;
- recruiting personnel; and
- obtaining capital.
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<PAGE>
Our current research prototype batteries meet some of the exacting
specifications demanded by the marketplace. Except for insubstantial revenues
from limited sales of prototype lithium polymer batteries, we presently have a
very limited supply of products available for sale. We have recently entered
into agreements valued at approximately $17 million, calling for us to supply
batteries to end users starting in the second quarter of calendar year 2000.
However, we do not expect to receive any significant revenues from the sale of
our products at least until the latter half of calendar year 2000. Receipt of
significant revenues from product sales will depend on, among other things,
rapid enlargement of our manufacturing capabilities to meet the requirements of
existing and potential product orders. Among many business risks we face, there
are risks that we will not be able to manufacture our products in sufficient
quantities, at an acceptable cost or with appropriate performance
characteristics, that we will not be able to successfully market such products,
and that such products will not achieve market acceptance. See "Risk Factors,"
below.
ABOUT THE OFFERING
This prospectus may be used only in connection with the resale by Ridgeway
Investment Limited, or assigns of shares of the common stock of Valence,
following, and contingent upon, their exercise of warrants to purchase such
common stock, as follows:
. Up to 7,500 shares may be acquired and sold pursuant to the exercise
of warrants at $7.5926 per share, through June 14, 2002;
. Up to 7,500 shares may be acquired and sold pursuant to the exercise
of warrants at $7.8408 per share through July 2, 2002;
. Up to 7,500 shares may be acquired and sold pursuant to the exercise
of warrants at $6.0844 per share through August 11, 2002;
. Up to 5,000 shares may be acquired and sold pursuant to the exercise
of warrants at $6.05 per share through September 20, 2002;
. Up to 7,500 shares may be acquired and sold pursuant to the exercise
of warrants at $5.5554 per share through October 5, 2002; and
. Up to 8,750 shares may be acquired and sold pursuant to the exercise
of warrants at $6.521 per share through November 4, 2002.
We will not receive any of the proceeds of the sale of the shares of
common stock which may be offered by the Selling Stockholder pursuant to this
prospectus, but will receive proceeds in the amount of the exercise prices of
any warrants which are exercised by the Selling Stockholder or a permitted
assignee of the warrants.
On March 1, 2000, there were 36,754,794 shares of our common stock
outstanding.
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.
WE MAY HAVE A NEED FOR ADDITIONAL CAPITAL. At December 26, 1999, we had cash and
cash equivalents of $31,422,000. 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
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<PAGE>
complete funding of planned capital expenditure expansion, research and product
development, marketing and
general and administrative expenses and to pursue joint venture 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 be available on favorable terms, if at all. If we cannot raise
additional funds, further development and production of our batteries may be
delayed, we may not be able to increase personnel in our sales and marketing
departments or otherwise execute our business plan, all of which may have a
material adverse effect on our operations and financial condition. In addition,
if any of the risks described in "Risk Factors" do occur, such as additional
costs resulting from an adverse judgment or settlement of litigation, we may
need to obtain additional funds to enable us to continue operations and execute
our business plan beyond the first quarter of fiscal 2001. Our financial
statements do not include any adjustments that might result from the outcome of
this uncertainty. The effects of these adjustments, if necessary, could be
material.
WE ARE A DEVELOPMENT STAGE COMPANY WITH A LIMITED QUANTITY OF PRODUCTS CURRENTLY
AVAILABLE FOR SALE. We are a development stage company and cannot anticipate
when, or if, we will ever have significant revenues from a product.
Historically, we derived our revenues primarily from a research and development
contract with Delphi Automotive Systems Group, which we completed in May 1998.
We presently have limited quantities of commercially developed and manufactured
products available for sale, although we have recently started shipping
batteries under one of two supply contracts we entered into in November, 1999.
If we cannot rapidly increase our production capabilities to make commercially
acceptable product, we may not be able to fulfill existing purchase orders in a
timely manner or at all, and we may not be able to procure additional purchase
orders, in which event, our business and financial condition would be materially
adversely affected.
OUR CURRENT AVAILABLE CAPITAL AND FUTURE REVENUES, IF ANY, WILL NOT BE
SUFFICIENT TO MEET OUR FUTURE OPERATING NEEDS. We have generally incurred
operating losses since inception in 1989 and had an accumulated deficit of
$182,031,000 as of December 26, 1999. We may never achieve or sustain
significant revenues or profitability in the future. We have negative working
capital and have sustained recurring losses related primarily to the research
and development and marketing of our products. We expect to incur significant
losses in the future, as we continue our product development, begin to build
inventory and continue our marketing efforts. We will need to secure additional
financing in order to continue operations and execute our business plan,
including planned capital expenditures beyond the first quarter of fiscal 2001,
unless we begin to generate significant operating revenue. We will have to
continue to devote a significant amount of management time to obtaining
financing.
WE MAY NOT BE ABLE TO OBTAIN ADDITIONAL FINANCING, IN WHICH CASE WE WOULD NEED
TO REDUCE DEVELOPMENTAL EFFORTS AND MAY NOT BE ABLE TO COMMERCIALIZE OUR
PRODUCTS. If we are unable to achieve profitability or we are unable to secure
additional financing on acceptable terms, we will be unable to continue to fund
our operations. We are parties to an agreement pursuant to which we are entitled
to capital grant advances from the Northern Ireland Industrial Development Board
once we obtain cumulative revenues from the sale of batteries of $4 million. We
may not achieve these cumulative revenues over the short-term, or at all.
Additionally, a lack of capital may require us to license to third parties
rights to commercialize products or technologies that we might otherwise seek to
develop ourselves, and to scale back or eliminate our research and product
development programs. The unavailability of adequate funds would preclude us
from continuing to redesign and modify our manufacturing facility, ramp up our
sales and marketing staff and otherwise execute our business plan, all of which
would have a material adverse effect on our business, financial condition, and
results of operations.
WE ARE INVOLVED IN LAWSUITS THAT COULD NEGATIVELY IMPACT OUR BUSINESS. We
currently have two substantial lawsuits in which we are involved, and a third in
which a recently-reached settlement is pending court approval, which would
result in the dismissal of the case. The recently-settled lawsuit was a class
action by a class of persons who purchased our common stock between May 7, 1992
and August 10, 1994, alleging that we violated federal securities laws and
seeking unspecified compensatory and punitive damages, attorneys' fees and costs
for claimed misstatement of our stock price in the public offering and open
market purchases of stock during that period. The complaint names the Company as
a defendant as well as some of our present and former officers and directors,
asserting that the Company and those individuals violated federal securities
laws by misrepresenting and failing to
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<PAGE>
disclose certain information about the Company's business during the class
period. On February 10, 2000, we announced a settlement of the class action,
subject to court approval. The second lawsuit involves a claim by a manufacturer
of one of our pieces of manufacturing equipment that we owe it approximately
$2.5 million; in this action, we have filed a counterclaim against the
manufacturer seeking damages to be determined at trial. The third lawsuit is a
contract claim that we instituted against several parties; one party has filed a
counterclaim against us and third parties claiming damages of approximately
$900,000 based on breach of a contract, and this matter is presently stayed
pending settlement discussions. Although we intend to defend vigorously the
claims against us in each of these lawsuits, if any of them is resolved
unfavorably to us we may be required to pay substantial monetary damages which
would have a material adverse effect on our financial condition, results of
operations and cash flows. In addition, our defense of these actions has, and
may continue to, result in substantial costs to us, as well as requiring the
significant dedication of management resources. If we choose to settle any of
these lawsuits, the settlement costs could also have a significant effect on our
cash resources and our financial condition.
WE MAY NOT BE ABLE TO COST-EFFECTIVELY MANUFACTURE OUR BATTERIES. To be
successful, we must manufacture commercial, high-quality quantities of our
products at competitive costs. To date, we have produced limited quantities of
prototype and production quality products that we believe have performance
characteristics that are suitable for a broad market. However, additional
development will be required to enable us to produce battery systems with these
characteristics from our manufacturing line. In addition, to facilitate broad
commercialization of our products, we will need to reduce our manufacturing
costs. Our batteries may not be manufacturable in long-run commercial quantities
to the performance specifications demanded by customers. We must still be able
to competitively manufacture these batteries. Our current manufacturing
technology will need to be more fully developed before we will be able to
manufacture our batteries in commercial quantities. We must be able to
substantially raise yields of commercial quality batteries in commercial
quantities in order to cost effectively produce our batteries. Failure to
achieve substantially increased yields of our batteries and reduce
unit-manufacturing costs will preclude us from offering our batteries at a
competitive price to the public and therefore cause a material adverse effect on
our business, results of operations and financial condition. 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, which would have a material adverse effect on our ability to
market our batteries even if the defect were corrected.
BECAUSE OUR BATTERIES ARE ONLY SOLD WHEN INCORPORATED INTO OTHER PRODUCTS, WE
RELY ON ORIGINAL EQUIPMENT MANUFACTURERS TO COMMERCIALIZE OUR PRODUCTS. To be
successful, our batteries must gain broad market acceptance. In addition, our
success will depend significantly on our ability to meet OEM customer
requirements by developing and introducing on a timely basis new products and
enhanced or modified versions of our existing products. OEMs often require
unique configurations or custom designs for battery systems, which must be
developed and integrated in the OEM's product well before the product is
launched by the OEM. Thus, there is often 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 OEM. If we are
unable to design, develop and introduce products that meet OEMs' and other
customers' exacting requirements on a timely basis, 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, all of which would have a material adverse effect on our business,
results of operations and financial condition. In addition, to determine the
requirements of each specific application, we will be dependent upon OEMs and
other intermediaries such as battery pack designers into whose products our
batteries will be incorporated. We may not receive adequate assistance from OEMs
to successfully commercialize our products.
WE MUST EXPAND OUR SALES STAFF, SUPPORT CAPABILITIES AND DISTRIBUTION CHANNELS
TO DISTRIBUTE OUR PRODUCTS ON A COMMERCIAL SCALE. To implement our 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. We may not be able to
sufficiently increase our staff or product support capabilities, or be
successful in our sales and marketing efforts. Failure in any of these areas
could have a material adverse effect on our business and results of operations.
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<PAGE>
WE ARE IN THE EARLY STAGE OF MANUFACTURING, AND IF WE ARE UNABLE TO DEVELOP
MANUFACTURING CAPABILITIES IN A COST EFFECTIVE MANNER, WE WILL NOT BE ABLE TO
GENERATE PROFITS. To date, we have not manufactured batteries on a
commercial scale. Until recently, our batteries only have been manufactured on
our pilot manufacturing line, which is able to produce prototype cells in
quantities sufficient to enable customer sampling and testing and product
development. We are currently in the early stages of transitioning production to
an automated high volume production line that will work with our newest battery
technology in our manufacturing facility in Mallusk, Northern Ireland. The
redesign and modification of the 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 rapidly scale up the manufacturing capacity, we will need to begin
fabrication of a second automated production line before completing full
qualification of the first line. In automating, redesigning and modifying the
manufacturing processes, we have been, and will continue to depend on, several
developers of automated production lines, which have limited experience in
producing equipment for the manufacture of batteries. A key determinant of our
current and future production capacity and profitability is the production yield
of our manufacturing process. To date, we have not achieved production yields
sufficient to sustain commercial production of our batteries. In 1993, we
entered into a purchase order for $100 million of our batteries, which
incorporated a previous technology, that we were unable to fulfill due to our
inability to commercially produce our batteries pursuant to the customer's
specifications. We must be able to substantially raise yields of commercial
quality batteries in commercial quantities in order to cost effectively produce
our batteries. Any failure to achieve substantially increased yields of our
batteries and reduce unit-manufacturing costs could have a material adverse
effect on our business, results of operations and financial condition. 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. We may not successfully develop
improved processes, design required production equipment, enter into acceptable
contracts for the fabrication of such equipment, obtain timely delivery of such
equipment, implement multiple production lines or successfully operate the
Mallusk facility. We may not be able to successfully automate our production on
a timely basis, if at all, and such automation may not result in greater
manufacturing capacity or lower manufacturing costs than our pilot production
line. Customer relationships could be damaged if we fail to begin volume
manufacturing on a timely basis or at all. Such failure could cause lost
opportunities and have a material adverse effect on our business, results of
operations and financial condition.
WE ARE EXPERIENCING DELAYS IN QUALIFYING OUR MANUFACTURING FACILITIES. We have
been unable to meet our prior schedules regarding delivery, installation,
de-bugging and qualification of the Northern Ireland facility production
equipment. As most of the production equipment is being specially manufactured
for us, further problems may develop and cause further delay in our current
schedules. 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 from our laboratory scale prototype work. We may need to further refine the
processes, which could cause substantial delays in the qualification and use of
this equipment. Furthermore, if we are able to refine our process, we may not be
able to produce the required amount of qualification samples to potential
customers. From our discussions with potential customers, we expect that
customers will require an extensive qualification period once the customer
receives its first commercial product off a production line.
WE DEPEND ON SOLE OR LIMITED SOURCE SUPPLIERS FOR CERTAIN KEY RAW MATERIALS TO
DEVELOP AND MANUFACTURE OUR BATTERIES. We depend on sole or limited source
suppliers for certain key raw materials used in our products. We generally
purchase sole or limited source 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. 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. We
may not be able to purchase raw materials at an acceptable cost. In addition,
the raw materials which we utilize must be of a very high quality, and we have
in the past experienced delays in product development due to the delivery of
nonconforming raw materials from our suppliers. If we are unable to obtain high
quality raw materials in sufficient quantities and on a timely basis, our
production of batteries may be delayed which will have a material adverse effect
on our business and results of operations.
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OUR BATTERIES MAY NOT BE ABLE TO ACHIEVE OR SUSTAIN MARKET ACCEPTANCE. To
achieve market acceptance, our batteries must offer significant performance
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. If our batteries do not achieve and maintain significant performance
advantages at a cost effective rate over other technologies and achieve
significant and sustained market acceptance, or if customers' applications which
incorporate our products do not achieve lasting market acceptance, our business,
results of operations and financial condition could be materially adversely
affected.
THERE HAS BEEN, AND CONTINUES TO BE, A RAPID EVOLUTION OF BATTERY TECHNOLOGIES.
The battery industry has experienced, and is expected to continue to experience,
rapid technological change. Various companies are seeking to enhance traditional
battery technologies, such as lead acid and NiCad, and other companies have
recently introduced or are developing batteries based on nickel metal hydride
("NiMH"), lithium and other emerging and potential technologies. While these
competitors are engaged in significant development work on these various battery
systems, 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, which have resulted in a customer perception that our technology
may not offer as many advantages as previously anticipated. 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 COMPETITORS MAY 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
lithium ion, competing polymer and, in some cases, NiMH batteries. These
suppliers include Matsushita Industrial Co., Ltd., Sony, Toshiba, SAFT America,
Inc. and PolyStor Corp. 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 phones and personal digital assistance
products, on the basis of performance, 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.
OUR SUCCESS DEPENDS HEAVILY ON OUR SENIOR MANAGEMENT PERSONNEL AND ON OUR
ABILITY TO ATTRACT AND RETAIN KEY EMPLOYEES. Our success is highly dependent
upon the active participation of our senior management personnel. We do not have
written employment contracts with any key employees and do not maintain key man
life insurance policies for any of our employees. 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. Competition for personnel, in particular for
product development and product implementation personnel, is intense, and we
compete in the market for personnel against numerous companies, including
larger, more established competitors with significantly greater financial
resources than us. The availability of skilled and unskilled workers in Northern
Ireland is limited due to a relatively low unemployment rate. From time to time
we experience difficulty in recruiting qualified personnel, and we cannot be
certain that we will be successful in attracting and retaining skilled
personnel. If we are unable to attract and retain other qualified personnel, we
may not be able to staff our manufacturing facility to operate at full capacity,
which could delay our production of batteries and cause us to breach our
obligations under existing or new purchase orders. Also, if we cannot attract
and retain experienced
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sales and marketing personnel, we may not achieve the visibility in the
marketplace that we need to obtain purchase orders, which would have a material
adverse effect on our financial condition.
WE FACE A RISK THAT OUR PENDING PATENT APPLICATIONS WILL NOT RESULT IN ISSUED
PATENTS AND THAT OUR ISSUED PATENTS WILL NOT PROVIDE PROTECTION AGAINST
COMPETITORS. Our ability to compete successfully will depend on whether we can
protect our 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 or safeguard
the proprietary technology underlying our batteries. In addition, 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 for any such breach. Moreover, 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. We intend to 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 have a
material adverse effect on our financial condition. In addition, we may not be
able to effectively protect our intellectual property rights outside of the
United States. If existing or future patents containing broad claims are upheld
by the courts, the holders of such patents could require companies to obtain
licenses. If we are found to be infringing third party patents, there is a risk
that we may not be able to obtain licenses to such products on reasonable terms,
if at all. Our failure to protect our proprietary technology may materially
adversely affect our financial condition and results of operations. Patent
applications in the United States are maintained in secrecy until patents issue,
and 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
any of our issued patents may not afford protection against a competitor.
OUR BATTERIES CONTAIN POTENTIALLY DANGEROUS MATERIALS, WHICH COULD EXPOSE US TO
LIABILITY. 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 released and, if
not properly released, may be flammable or potentially even explosive. Our
batteries, based on an earlier (and since abandoned) technology, have smoked,
caught fire and vented gas in the past, and we have attempted to design our
current batteries to reduce this risk; if we are unsuccessful in these efforts,
we could be exposed to product liability litigation. In addition, our batteries
incorporate potentially dangerous materials, including lithium. While we believe
the materials in our batteries are less reactive than other potentially
dangerous materials found in other types of batteries, it is possible that these
materials will require special handling. It is possible 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 condition. We expect that our customers
will have to use this type of circuitry.
WE HAVE NOT COMPLETED SAFETY TESTING OUR BATTERIES AND MAY NOT BE ABLE TO MAKE
COMMERCIAL SALES OF OUR BATTERIES UNTIL WE SUCCESSFULLY COMPLETE SUCH TESTS. We
have conducted safety testing of our batteries and have submitted batteries to
Underwriters Laboratories for certification, which is required by many OEMs
prior to placing a purchase order with the Company. We cannot assure you that
Underwriters Laboratories will certify our batteries. As part of our safety
testing program, prototype batteries of various sizes, designs and chemical
formulations are subject to abuse testing, where the battery is subjected to
conditions outside the expected normal operating conditions of the battery.
While some prototype batteries have survived these tests, others have vented
gases containing vaporized solvents and have caught fire. These results were
generally expected, and until we have completed testing we cannot make a
complete determination as to the conditions in which the battery must be
operated. Additionally, each new battery design requires new safety testing.
Therefore, safety problems may develop with respect to our battery technology
that could prevent or delay commercial introduction.
SAFETY RISKS IN OUR FACILITIES COULD DELAY PRODUCTION AND ADVERSELY AFFECT
OPERATIONS. There is a risk that an accident in our facilities will occur. Any
accident, whether with the use of a battery or in our operations, could result
in significant manufacturing delays or claims for damages resulting from
injuries, which would adversely affect our operations and financial condition.
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<PAGE>
WE DO NOT FULLY CONTROL OUR JOINT VENTURE OPERATIONS, STRATEGIES AND FINANCIAL
DECISIONS AND WE CANNOT ASSURE YOU THAT OUR PRODUCTS WILL BE MARKETED
SUCCESSFULLY THROUGH THESE VENTURES. We do not control or manage either of our
operating joint ventures. Consequently, we are required to depend on the
management of our venture partners to successfully operate these ventures. There
is a risk that our joint venture partners may have economic, business or legal
interests or goals that conflict with ours or that we may be required to fulfill
obligations of our joint venture partners if they are unable to meet their
obligations. Any significant disagreements with our venture partners could have
a material adverse effect on our ventures. Also, we depend to a significant
degree on local partners in our joint ventures to provide us with regulatory and
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. Also, if these ventures are not successful, they
could significantly damage our reputation, which will make 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. We have received substantially all our revenues to date from a
research and development agreement with Delphi Automotive Systems Group, which
we completed in May 1998. The Delphi agreement was for joint development in the
automotive market. 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 not be able to enter into any such alliances. The use of
alliances for our development, product design, volume purchase and manufacturing
and marketing expertise can reduce the need for development and use of internal
resources. Further, even if we could collaborate with a desirable partner, there
is a chance that 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.
A STRICT REGULATORY ENVIRONMENT MAY DEVELOP WHICH MAY DELAY SHIPMENTS AND IMPOSE
ADDITIONAL COSTS ON US. At the present time, neither the storage, use or
disposal of the component parts of our batteries nor the transport of our
batteries is regulated by federal, state or local law. However, we expect that
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 have a material adverse effect on our business.
THE FAILURE OF OUR KEY SUPPLIERS AND CUSTOMERS TO BE YEAR 2000 COMPLIANT COULD
NEGATIVELY IMPACT OUR BUSINESS. We use a number of computer software programs
and operating systems in our internal operations, including applications used in
financial business systems and various administration functions. To the extent
that these software applications contained source code that had not been updated
to the calendar year "2000," we have recently completed modification or
replacement of such source code to the extent we believe necessary. There is a
limited risk that these modifications might not be completely effective, and
that significant computer systems of Valence could yet be affected by an adverse
"Year 2000" event. Although to date we have not experienced any problems with
suppliers and customers arising out of "Year 2000" computer transitions, we do
not have direct knowledge of our suppliers' and customers' "Year 2000"
remediation. Thus, there continues to be some risk that "Year 2000" problems
might arise which could adversely affect us in our own operations, or indirectly
through adverse impacts on the operations of our suppliers, customers or
financial institutions.
POLITICAL INSTABILITY IN NORTHERN IRELAND MAY DELAY PROGRESS IN OUR NORTHERN
IRELAND FACILITY. Despite the recent peace accord in Northern Ireland, we cannot
assure you that instabilities will not continue in the future. Any political
instability in Northern Ireland could delay our manufacturing of batteries. Any
delays could also cause us to lose sales and marketing opportunities, as
potential customers would find other vendors to meet their needs.
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<PAGE>
CORPORATE INSIDERS OR AFFILIATES WILL BE ABLE TO EXERCISE SIGNIFICANT CONTROL
OVER MATTERS REQUIRING STOCKHOLDER APPROVAL. As of December 26, 1999, our
officers, directors, and their affiliates as a group beneficially owned
approximately 20.91% of our outstanding common stock. 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.
ANTI-TAKEOVER PROVISIONS IN OUR CORPORATE CHARTER OR THOSE WHICH APPLY TO US BY
VIRTUE OF THE APPLICATION OF DELAWARE GENERAL CORPORATION LAW WILL MAKE IT MORE
DIFFICULT FOR A THIRD PARTY TO ACQUIRE A MAJORITY INTEREST OF OUR OUTSTANDING
VOTING STOCK. Our Board of Directors has the authority to issue up to 50 million
shares of undesignated preferred stock and to determine the price, rights,
preferences, and privileges of those shares without any further vote or action
by the stockholders. As of October 31, 1999, holders of the Series A Preferred
Stock had converted all outstanding shares of the Series A Preferred Stock. The
rights of the holders of our capital stock are subject to the rights of the
holders of the Series B Preferred Stock, 3,500 shares of which currently are
outstanding, and 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. In addition, we are subject to the anti-takeover
provisions of Section 203 of the Delaware General Corporation Law, which
prohibits us from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless the business
combination is approved in a prescribed manner. The application of Section 203
also could have the effect of delaying or preventing a change of control of
Valence. Furthermore, our classified Board of Directors and certain other
provisions of our Certificate of Incorporation may have the effect of delaying
or preventing changes in control or management, which could adversely affect the
market prices of our common stock and Series B Preferred Stock.
IF THE ISSUANCE OF OUR PREFERRED STOCK VIOLATED THE NASDAQ STOCK MARKET'S
LISTING MAINTENANCE REQUIREMENTS, OR IF WE OTHERWISE FAIL TO CONTINUE TO MEET
THE NASDAQ STOCK MARKET'S LISTING MAINTENANCE REQUIREMENTS, THE NASDAQ STOCK
MARKET MAY DELIST OUR COMMON STOCK. In late January 1999, The Nasdaq Stock
Market released its guidance on "future priced securities" and the necessity of
the issuer to comply with The Nasdaq Stock Market's listing maintenance
requirements in issuing these securities. In the event that The Nasdaq Stock
Market determined that the issuance of our Series A Preferred Stock and/or
Series B Preferred Stock was in violation of these listing maintenance
requirements, or if we are otherwise unable to continue to meet its listing
maintenance requirements, The Nasdaq Stock Market might delist us. Delisting
would have a material adverse effect on the price of our common stock and on the
levels of liquidity currently available to our stockholders. We may not be able
to satisfy these listing requirements on an ongoing basis.
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, a 4.9% stockholder of Valence, were to exercise all of the warrants
it holds and convert all of the shares of preferred stock it owns, as of
December 26, 1999 it would have acquired approximately 1,511,542 shares of our
common stock. To date, CC investments has exercised warrants representing
349,979 shares of common stock. 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, such sales could have a negative effect on the
market price of our common stock and would dilute your holdings in our common
stock. Additionally, dilution or the potential for dilution could materially
impair our ability to raise capital through the future sale of equity
securities.
VARIABLE CONVERSION OF SERIES B PREFERRED STOCK. CC Investments holds all of our
outstanding Series B Preferred Stock. The conversion price of our Series B
Preferred Stock is variable and may depress the price of our common stock and
substantially dilute your stock. Since July 27, 1999, our Series B Preferred
Stock 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. For example,
if on December 26, 1999 our common stock in the previous ten trading days had
been trading at or above $6.03, the remaining 3,500 shares of Series B Preferred
Stock held by CC Investments would have been convertible into approximately
616,020 shares of our common stock. If, however, on that date the average of the
Page 9
<PAGE>
lowest six closing bid prices of our common stock over the previous ten trading
days (referred in the table below as the "average price") had been lower than
$6.03, then the Series B Preferred Stock would have converted into a greater
number of shares.
The following table illustrates this effect:
NUMBER OF SHARES INTO WHICH
3,500 SHARES OF SERIES B PREFERRED
AVERAGE PRICE WOULD CONVERT
If our common stock's closing bid
price is below the respective
prices set forth in the left
column, in six out of ten
consecutive trading days
$6.03 ....................... 616,020
$5.00 ....................... 742,921
$4.00 ....................... 928,651
$3.00 ....................... 1,238,201
The effect of this variable conversion rate, if applicable, will be to depress
further the market price of our common stock and to dilute further stockholder
holdings in our common stock.
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 such as the
fluctuation in our operating results, announcements of technological innovations
or new commercial products by us or our competitors, failure to achieve
operating results projected by securities analysts, governmental regulation,
developments in our patent or other proprietary rights or our competitors'
developments, our relationships with current or future collaborative partners,
and general market conditions may have a significant effect on the market price
of our common stock. We do not pay, or expect to pay, dividends to the holders
of our common stock. We have never paid any cash dividends and do not anticipate
paying cash dividends on our common stock in the foreseeable future.
YOU MAY EXPERIENCE DILUTION. The offering of shares of common stock by the
Selling Stockholder in connection with a contemporaneous or later offering by
the Company or other selling shareholders may result in an adjustment to the
exercise or conversion price of certain warrants and other convertible
securities. If an adjustment is made, you will experience dilution.
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
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<PAGE>
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 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:
- - Proxy Statement on Schedule 14A for the Company's Annual Meeting of
Shareholders for the Year 2000, dated January 28, 2000 and filed January
28, 2000.
- - Annual Report on Form 10-K for the year ended March 28, 1999, filed June
28, 1999;
- - Current Report on Form 8-K, dated June 28, 1999 and filed July 6, 1999;
- - Current Report on Form 8-K, dated July 29, 1999 and filed August 5, 1999;
- - Current Report on Form 8-K, dated December 21, 1999 and filed January 7,
2000;
- - Current Report on Form 8-K, dated February 10, 2000 and filed February 14,
2000;
- - Current Report on Form 8-K, dated March 1, 2000 and filed March 6, 2000;
- - Quarterly Report on Form 10-Q, for the fiscal quarter ended June 27, 1999,
filed August 11, 1999;
- - Quarterly Report on Form 10-Q, for the fiscal quarter ended September 26,
1999, filed November 10, 1999;
- - Amendment to Quarterly Report on Form 10-Q, for the fiscal quarter ended
June 27, 1999, filed November 15, 1999;
- - Quarterly Report on Form 10-Q, for the fiscal quarter ended December 26,
1999, filed February 9, 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.
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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.
SELLING STOCKHOLDER
The following table contains information about beneficial ownership of the
Selling Stockholder, Ridgeway Investment Limited, in our equity securities as of
March 1, 2000, to the extent known by the Company. On March 1, 2000, there were
36,754,794 shares of our common stock outstanding. 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
SELLING STOCKHOLDER PRIOR TO OFFERING*
- ------------------- -------------------------- NUMBER OF
SHARES
NUMBER PERCENT OFFERED***
------------ ---------- ----------
<S> <C> <C> <C>
Ridgeway Investment Limited......... 43,750 ** 43,750
<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 43,750 shares of Common
Stock.
** Represents less than 1% of the Company's 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 any Selling Stockholder, based on the exercise
prices of the warrants as set forth on page 2, above. Any such proceeds received
will be used for general operating purposes of the Company.
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<PAGE>
PLAN OF DISTRIBUTION
We are registering 43,750 shares of common stock on behalf of the Selling
Stockholder. We issued the common stock purchase warrants for 43,750 shares of
common stock to the Selling Stockholder in connection with the assistance of the
Selling Stockholder and certain prior holders of warrants to the Company in its
capital raising activity.
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, through short
sales of shares, or
o 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-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 Selling Stockholder may also pledge shares of common stock under loans, and
upon default by the Selling Stockholder the pledged shares might be sold using
this prospectus.
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.
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EXPERTS
The financial statements as of March 28, 1999 and March 29, 1998 and for
the period from March 3, 1989 (date of inception) to March 28, 1999 and for each
of the three years in the period ending March 28, 1999, 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.
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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............................................ $ 429.55
Legal fees and expenses..................................... $ 10,000.00
Accounting fees and expenses................................ $ 4,000.00
Miscellaneous............................................... $ 1,000.00
----------
Total....................................................... $ 15,429.55
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, judgements, 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
<PAGE>
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 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 plan's annual report pursuant to Section
15(d) of the Exchange Act) that is incorporated by reference in the
Page II-2
<PAGE>
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 March 7, 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 March 7, 2000
- ------------------------ and President (Principal Executive Officer)
Lev M. Dawson
/S/ JAY L. KING Chief Financial Officer (Principal Financial and March 7, 2000
- ------------------------ Accounting Officer)
Jay L. King
/S/ CARL E. BERG Director March 7, 2000
- ------------------------
Carl E. Berg
/S/ ALAN F. SHUGART Director March 7, 2000
- ------------------------
Alan F. Shugart
/S/ BERT C. ROBERTS, JR. Director March 7, 2000
- ------------------------
Bert C. Roberts, Jr.
</TABLE>
Page II-4
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBIT TITLE
- -------- ---------------------------------------------------------------------
5.1 Opinion Troop Steuber Pasich Reddick & Tobey
23.1 Consent of PricewaterhouseCoopers LLP, independent accountants.
23.2 Consent of Troop Steuber Pasich Reddick & Tobey (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
EXHIBIT 5.1
OPINION OF TROOP STEUBER PASICH REDDICK & TOBEY, LLP
March 8, 2000
Valence Technology, Inc.
301 Conestoga Way
Henderson, NV 89015
Ladies/Gentlemen:
At your request, we have examined the Registration Statement on Form S-3
(the "Registration Statement") to which this letter is attached as Exhibit 5.1
filed by Valence Technology, Inc., a Delaware corporation (the "Company"), in
order to register under the Securities Act of 1933, as amended, (the "Act"),
43,750 shares of common stock (the "Shares") of the Company to be issued upon
exercise of outstanding Warrants (the "Warrants").
We are of the opinion that the Shares have been duly authorized and upon
issuance pursuant to the terms of the Warrants, the Shares will be validly
issued, fully paid and non-assessable.
We consent to the use of this opinion as an Exhibit to the Registration
Statement and to the use of our name in the Prospectus constituting a part
thereof.
Respectfully submitted,
/S/ TROOP STEUBER PASICH REDDICK & TOBEY, LLP
Troop Steuber Pasich Reddick & Tobey, LLP
Page II-6
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated May 20, 1999 (except for Note 17 as to
which the date is June 16, 1999) relating to the financial statements, which
appears in the Valence Technology, Inc. Annual Report on Form 10-K for the year
ended March 28, 1999. We also consent to the reference to us under the heading
"Experts" in such Registration Statement.
PricewaterhouseCoopers LLP
March __, 2000
Page II-7
