"We started our new fiscal year with progress in a number of areas," commented Robert L. Kanode, president and CEO of Valence Technology. "During the quarter, we signed new supply and MOU agreements with Oxygen, Siemens and S&C Electric as we strengthen our focus on top tier automotive and stationary customers. While results for the quarter were expected to be lower due to overall economic conditions, we believe that our technology and manufacturing experience positions Valence to capture the upside as demand improves early next year. Our expertise in the large format market has enabled discussions with many motive and utility customers who also indicate expanded budgets next year. In the interim, we continue to manage our resources efficiently.

"While grant money from the Department of Energy is unavailable to us at this time, our loan application submitted in March 2009 to establish a U.S. manufacturing plant has now been deemed substantially complete - a key step in the application process. We are encouraged about the possibility of federal funding for construction of a new plant which would provide new jobs and increased supply of alternative energy solutions for the U.S. markets. However, our long term plans continue to focus on improving sales in both U.S. and European markets using our existing manufacturing capability as a platform to expand as demand dictates."

Summary of results for fiscal first quarter 2010 compared to 2009 include:

Revenue of $4.7 million compared to $11.0 million.

Gross margin of $807,000 compared to a negative $26,000.

Operating expenses of $5.8 million compared to $4.6 million.

Operating loss of $5.0 million compared to $4.6 million

Net loss available to common shareholders of $6.2 million or $0.05 per share, compared to a loss of $5.6 million or $0.05 per share.

As expected, first quarter fiscal 2010 revenue declined compared to the same period last year. The $6.3 million decline was mainly due to a slowdown in global economic conditions, which resulted in lower overall sales of large format battery systems to Segway and the Tanfield Group, compared to the same period last year. However, the customer revenue mix was broader for the recent quarter and included sales to Brammo, ISE and Lishen.

Gross margin as a percentage of sales increased in the first quarter of fiscal 2010 to 17.1% compared to a negative margin in the first quarter of fiscal 2009. Last year's quarter included a $1.5 million adjustment related to discontinuance of the N-Charge product line. The Company's operating loss widened by $300,000 due to higher operating expenses, including higher litigation costs incurred to protect and defend the company's patent estate.

FIRST QUARTER FISCAL 2010 CONFERENCE CALL AND WEBCAST

Company management will conduct a conference call to discuss its results on Friday, Aug. 7, at 9 a.m. CDT (10 a.m. EDT).

A live webcast of the conference call can be accessed by visiting Valence's Web site at www.valence.com and clicking on the following links: Investor Relations - Events & Presentations. To access the webcast, please go to this Web site approximately fifteen minutes prior to the start of the call to register, download, and install any necessary audio software.

Those callers within the United States and Canada can dial 866-788-0544 and enter participant passcode 78924176 to participate. Callers outside the United States and Canada can dial 857-350-1682 and enter participant passcode 78924176 to participate.

A replay of the webcast will be available on the company's Web site at www.valence.com. A telephonic replay will also be available from 12 p.m. CDT on Aug. 7, 2009, through 12 p.m. CDT on Aug. 14, 2009. To access the replay, please dial 888-286-8010 and enter passcode 89397562. Callers outside the United States and Canada can access the replay by dialing 617-801-6888 and entering the passcode 89397562.

ABOUT VALENCE TECHNOLOGY, INC.

Valence Technology is an international leader in the development of lithium phosphate energy storage solutions.